SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB/A
(Mark One)

(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934

For the Fiscal Year Ended January 31, 2005
                                       OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

Commission File No. 0-33259

                             ENERGAS RESOURCES, INC.
                             -----------------------
                 (Name of Small Business Issuer in its charter)

                Delaware                                  73-1620724
         ------------------------                  -----------------------
         (State of incorporation)              (IRS Employer Identification No.)

      800 Northeast 63rd Street
       Oklahoma City, Oklahoma                                   73105
    -------------------------------                           -----------
   (Address of Principal Executive Office)                     Zip Code

Registrant's telephone number, including Area Code: (405)-879-1752
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:

                                  Common Stock
                               -------------------
                                (Title of Class)

Check whether the Registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the Registrant was required to file such
reports) and (2) has been subject to such filing requirements for the past 90
days.
                                      X
                                    -----
                                     YES      NO

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act):

                                Yes             No     X
                                    -------         -------

Check if disclosure  of delinquent  filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure  will be contained,  to the
best  of  the  Registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. [X]

The Company's revenues during the year ended January 31, 2005 were $668,490.

The aggregate market value of the voting stock held by non-affiliates of the
Company, (33,402,494 shares) based upon the closing price of the Company's
common stock on May 24, 2005 was approximately $11,022,823.

Documents incorporated by reference:      None

As of June 30, 2005 the Company had 49,878,135 outstanding shares of common
stock.


<PAGE>


5



           CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

     This report includes  "forward-looking  statements".  All statements  other
than  statements  of  historical  facts  included in this report,  regarding the
Company's  financial  position,  reserve  quantities  and  net  present  values,
business strategy,  plans and objectives of management of the Company for future
operations and capital expenditures,  are forward-looking  statements.  Although
the Company  believes  that the  expectations  reflected in the  forward-looking
statements and the assumptions  upon which such  forward-looking  statements are
based  are  reasonable,  it can give no  assurance  that such  expectations  and
assumptions  will prove to have been  correct.  Reserve  estimates are generally
different  from the  quantities  of oil and  natural  gas  that  are  ultimately
recovered.



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<PAGE>


                                    GLOSSARY

         The following terms are used throughout this report:

         BBL. One stock tank barrel, or 42 U.S. gallons liquid volume, usually
used herein in reference to crude oil or other liquid hydrocarbons.

         BOE. Equivalent barrels of oil, using the ratio of six Mcf of natural
gas to one Bbl of crude oil, condensate or natural gas liquids.

         BTU. A British thermal unit which is the amount of heat required to
raise the temperature of one avoirdupois pound of pure water form 58.5 degrees
to 59.5 degrees Fahrenheit under standard conditions.

         DEVELOPED ACREAGE. The number of acres which are allocated or
assignable to producing wells or wells capable of production.

         DEVELOPMENT WELL. A well drilled as an additional well to the same
reservoir as other producing wells on a Lease, or drilled on an offset Lease not
more than one location away from a well producing from the same reservoir.

         EXPLORATORY WELL. A well drilled in search of a new undiscovered pool
of oil or gas, or to extend the known limits of a field under development.

         GROSS ACRES OR WELLS. A well or acre in which a working interest is
owned. The number of gross wells is the total number of wells in which a working
interest is owned.

         LEASE. Full or partial interests in an oil and gas lease, authorizing
the owner thereof to drill for, reduce to possession and produce oil and gas
upon payment of rentals, bonuses and/or royalties. Oil and gas leases are
generally acquired from private landowners and federal and state governments.
The term of an oil and gas lease typically ranges from three to ten years and
requires annual lease rental payments of $1.00 to $2.00 per acre. If a producing
oil or gas well is drilled on the lease prior to the expiration of the lease,
the lease will generally remain in effect until the oil or gas production from
the well ends. The Company is required to pay the owner of the leased property a
royalty which is usually between 12.5% and 16.6% of the gross amount received
from the sale of the oil or gas produced from the well.

         MCF. One thousand cubic feet.

         NET ACRES OR WELLS. A net well or acre is deemed to exist when the sum
of fractional ownership working interests in gross wells or acres equals one.
The number of net wells or acres is the sum of the fractional working interests
owned in gross wells or acres expressed as whole numbers and fractions.


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<PAGE>

         OPERATING COSTS. The expenses of producing oil or gas from a formation,
consisting of the costs incurred to operate and maintain wells and related
equipment and facilities, including labor costs, repair and maintenance,
supplies, insurance, production, severance and other production excise taxes.

         PRODUCING PROPERTY. A property (or interest therein) producing oil or
gas in commercial quantities or that is shut-in but capable of producing oil or
gas in commercial quantities, to which Producing Reserves have been assigned.
Interests in a property may include Working Interests, production payments,
Royalty Interests and other non-working interests.

         PRODUCING RESERVES. Proved Developed Reserves expected to be produced
from existing completion intervals open for production in existing wells.

         PROSPECT. An area in which a party owns or intends to acquire one or
more oil and gas interests, which is geographically defined on the basis of
geological data and which is reasonably anticipated to contain at least one
reservoir of oil, gas or other hydrocarbons.

         PROVED DEVELOPED RESERVES. Proved developed oil and gas reserves are
reserves that can be expected to be recovered through existing wells with
existing equipment and operating methods. Additional oil and gas expected to be
obtained through the application of fluid injection or other improved recovery
techniques for supplementing the natural forces and mechanisms of primary
recovery may be included as "proved developed reserves" only after testing by a
pilot project or after the operation of an installed program has confirmed
through production response that increased recovery will be achieved.

         PROVED RESERVES. Proved oil and gas reserves are the estimated
quantities of crude oil, natural gas, and natural gas liquids which geological
and engineering data demonstrate with reasonable certainty to be recoverable in
future years from known reservoirs under existing economic and operating
conditions, i.e., prices and costs as of the date the estimate is made. Prices
include consideration of changes in existing prices provided only by contractual
arrangements, but not on escalations based upon future conditions.

    (i) Reservoirs are considered proved if economic producibility is supported
by either actual production or conclusive formation testing. The area of a
reservoir considered proved includes (a) that portion delineated by drilling and
defined by gas-oil and/or oil-water contacts, if any; and (b) the immediately
adjoining portions not yet drilled, but which can be reasonably judged as
economically productive on the basis of available geological and engineering
data. In the absence of information on fluid contacts, the lowest known
structural occurrence of hydrocarbons controls the lower proved limit of the
reservoir.

    (ii) Reserves which can be produced economically through application of
improved recovery techniques (such as fluid injection) are included in the
"proved" classification when successful testing by a pilot project, or the
operation of an installed program in the reservoir, provides support for the
engineering analysis on which the project or program was based.


                                       4
<PAGE>

      (iii) Estimates of proved reserves do not include the following: (a) oil
that may become available from known reservoirs but is classified separately as
"indicated additional reserves", (b) crude oil, natural gas, and natural gas
liquids, the recovery of which is subject to reasonable doubt because of
uncertainty as to geology, reservoir characteristics, or economic factors; (c)
crude oil, natural gas, and natural gas liquids, that may occur in undrilled
prospects; and (d) crude oil, natural gas, and natural gas liquids, that may be
recovered from oil shales, coal, gilsonite and other such sources.

         PROVED UNDEVELOPED RESERVES. Proved undeveloped oil and gas reserves
are reserves that are expected to be recovered from new wells on undrilled
acreage, or from existing wells where a relatively major expenditure is required
for recompletion. Reserves on undrilled acreage are limited to those drilling
units offsetting productive units that are reasonably certain of production when
drilled. Proved reserves for other undrilled units can be claimed only where it
can be demonstrated with certainty that there is continuity of production from
the existing productive formation. Proved undeveloped reserves are not
attributable to any acreage for which an application of fluid injection or other
improved recovery technique is contemplated, unless such techniques have been
proved effective by actual tests in the area and in the same reservoir.

         ROYALTY INTEREST. An interest in an oil and gas property entitling the
owner to a share of oil and gas production free of Operating Costs.

         UNDEVELOPED ACREAGE. Lease acres on which wells have not been drilled
or completed to a point that would permit the production of commercial
quantities of oil and gas regardless of whether or not such acreage contains
proved reserves. Undeveloped acreage should not be confused with undrilled
acreage which is "Held by Production" under the terms of a lease.

         WORKING INTEREST. The operating interest under a Lease which gives the
owner the right to drill, produce and conduct operating activities on the
property and a share of production, subject to all Royalty Interests and other
burdens and to all costs of exploration, development and operations and all
risks in connection therewith.




                                       5
<PAGE>


ITEM 1. DESCRIPTION OF BUSINESS

     The Company was incorporated under the laws of British Columbia,  Canada on
November  2, 1989 and on August 20,  2001 the Company  became  domesticated  and
incorporated in Delaware.

      The Company is involved in the exploration and development of oil and gas.
The Company's activities are primarily dependent upon available financial
resources to fund the costs of drilling and completing wells.

      The Company evaluates undeveloped oil and gas prospects and participates
in drilling activities on those prospects which in the opinion of management are
favorable for the production of oil or gas. If, through its review, a
geographical area indicates geological and economic potential, the Company
attempts to acquire Leases or other interests in the area and assemble a
Prospect. The Company normally sells portions of its leasehold interests in a
Prospect to unrelated third parties, thus sharing risks and rewards of the
exploration and development of the Prospect with the joint owners pursuant to an
operating agreement. One or more Exploratory Wells may be drilled on a Prospect,
and if the results indicate the presence of sufficient oil and gas reserves,
additional Development Wells may be drilled on the Prospect. The Company
typically seeks potential joint venture partners for development of its
Prospects.

     The Company's  corporate  offices are located at 800 Northeast 63rd Street,
Third Floor,  Oklahoma City,  Oklahoma  73105 and its telephone  number is (405)
879-1752. The Company's web site is www.energasresources.com.

PRINCIPAL AREAS OF OPERATION

     The Company  principally  operates  in the Arkoma  Basin in  Oklahoma,  the
Powder River Basin in Wyoming and the Appalachian Basin of Eastern Kentucky.

       As of June 30, 2005 the Company had 4 gas wells in the Arkoma Basin which
were producing approximately 444 Mcf of gas per day.

      The Company's oil and gas production in the Powder River Basin are
attributable to two wells in Rusty Creek Prospect in Niobrara County, Wyoming.
The Company does not intend to drill any additional wells on this prospect. As
of June 30, 2005, the Company's two wells in the Rusty Creek Prospect produced
approximately 21 barrels of crude oil per day.

     In August 2003 the Company  acquired  31  producing  wells with a gathering
system,  compressor stations, plus developed and undeveloped acreage. All of the
acquired  properties are located in the Appalachian  Basin of eastern  Kentucky.
The Kentucky  properties  were  acquired  from three  private  corporations  for
$3,000,000 in convertible  notes. In March 2004 the Company paid $100,000,  plus
interest,  on one of the notes and holders of notes with a  remaining  principal
amount  of  $2,400,000  converted  their  notes  into  4,800,000  shares  of the
Company's common stock. The remaining note, in the principal amount of $485,647,
as of  January  31,  2005 bears  interest  at 8.5% per year and is due in August
2023. At any time prior to


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<PAGE>

August 1, 2006 all or any part of the unpaid principal or interest due on this
note may be converted into shares of the Company's common stock on the basis of
one share of common stock for every dollar of note principal or interest
converted.

DRILLING ACTIVITIES AND PROVEN RESERVES

      During the periods indicated, the Company drilled or participated in the
drilling of the following wells:

                             Year Ended January 31,
                             2003          2004             2005
                             ----          ----             ----
                         Gross   Net   Gross   Net      Gross   Net
                         -----   ---   -----   ---      -----   ---

Exploratory Wells (1):
  Productive:
   Oil                   --      --
   Gas                   --      --    1.00    .502        1   .137
  Nonproductive          --      --    1.00    1.00       --     --

Development Wells (1):
  Productive:
   Oil                   --      --                        1   .137
   Gas                   --      --      6    5.25        27  9.625
  Nonproductive          --      --

Total Wells (1):
  Productive:
   Oil                   --      --                        1   .137
   Gas                   --      --      7   6.125        28  9.762
  Nonproductive          --      --      1       1        --     --

(1)  Each well completed to more than one producing zone is counted as a single
     well. The Company has royalty interests in certain wells that are not
     included in this table.

      In May 2003 the Company arranged with a private investor to fund the
drilling of two natural gas wells in the Arkoma Basin of eastern Oklahoma. The
two wells were drilled in June 2003 and one well was successfully completed as a
gas well and the other well was a dryhole. The Company will receive
approximately 5% of the production from the productive well, after payment of
the Company's share of operating expenses, until the investor is repaid the
amounts advanced to drill and complete the wells, which were approximately
$490,000. After the amount advanced by the investor has been repaid, the Company
will receive approximately 25% of the production from the well after payment of
the Company's share of operating expenses

      The following table shows, as of June 30, 2005, by state and basin, the
Company's producing wells, Developed Acreage, and Undeveloped Acreage, excluding
service (injection and disposal) wells:


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<PAGE>



             Productive Wells (1)   Developed Acreage    Undeveloped Acreage (2)
             --------------------   -----------------    -----------------------
               Gross        Net     Gross        Net     Gross          Net

Oklahoma           4        1.5        --         --        --           --
Wyoming            2         .7        80         32     7,085     4,356.07
Kentucky          63       40.5     1,260      1,134    13,317       11,652
Kansas             2       .275        --         --        --           --

Totals            71     42.975     1,340      1,166    20,402    16,008.07

(1)  The wells in Oklahoma and Kentucky are gas wells and the wells in Wyoming
     are oil wells.
(2)  "Undeveloped Acreage" includes leasehold interests on which wells have not
     been drilled or completed to the point that would permit the production of
     commercial quantities of natural gas and oil regardless of whether the
     leasehold interest is classified as containing proved undeveloped reserves.

      The following table shows, as of June 30, 2005 the status of Company's
gross developed and undeveloped acreage.

      Gross Acreage           Held by Production     Not Held by Production
      -------------           ------------------     ----------------------

      Oklahoma                         640                      --
      Wyoming                          640                   6,526
      Kentucky                      12,000                   2,457
      Kansas                           480                   3,884

      Acres Held By Production remain in force so long as oil or gas is produced
from the well on the particular lease. Leased acres which are not Held By
Production require annual rental payments to maintain the lease until the first
to occur of the following: the expiration of the lease or the time oil or gas is
produced from one or more wells drilled on the lease acreage. At the time oil or
gas is produced from wells drilled on the leased acreage the lease is considered
to be Held By Production.

      The Company does not own any Overriding Royalty Interests.

      Title to properties is subject to royalty, overriding royalty, carried,
net profits, working and other similar interests and contractual arrangements
customary in the oil and gas industry, to liens for current taxes not yet due
and to other encumbrances. As is customary in the industry in the case of
undeveloped properties, little investigation of record title is made at the time
of acquisition (other than a preliminary review of local records). Drilling
title opinions are always prepared before commencement of drilling operations;
however, as is customary in the industry.

      The following table sets forth the Company's net production of oil and
gas, average sales prices and average production costs during the periods
presented:

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<PAGE>



                                            Year Ended January 31,
                                          -----------------------------
Production Data:                          2003        2004         2005
                                          ----        ----         ----

   Production -
      Oil (Bbls)                           403         950         4,008
      Gas (Mcf)                         30,683      41,411       106,276
   Average sales price -
      Oil (Bbls)                       $ 26.08     $ 28.62       $ 39.06
      Gas (Mcf)                        $  3.44     $  4.86       $  5.33
   Average production
       costs per Mcf                   $  4.79     $  3.74       $  2.49

      Production costs may vary substantially among wells depending on the
methods of recovery employed and other factors, but generally include severance
taxes, administrative overhead, maintenance and repair, labor and utilities.

      The Company is not obligated to provide a fixed and determined quantity of
oil or gas in the future. During the last three fiscal years, the Company has
not had, nor does it now have, any long-term supply or similar agreement with
any government or governmental authority.

      Below are estimates of the Company's net Proved Reserves and the present
value of estimated future net revenues from such Reserves based upon the
standardized measure of discounted future net cash flows relating to proved oil
and gas reserves in accordance with the provisions of Statement of Financial
Accounting Standards No. 69, "Disclosures about Oil and Gas Producing
Activities" (SFAS No. 69). The standardized measure of discounted future net
cash flows is determined by using estimated quantities of Proved Reserves and
the periods in which they are expected to be developed and produced based on
period-end economic conditions. The estimated future production is priced at
period-end prices, except where fixed and determinable price escalations are
provided by contract. The resulting estimated future cash inflows are then
reduced by estimated future costs to develop and produce reserves based on
period-end cost levels. No deduction has been made for depletion, depreciation
or for indirect costs, such as general corporate overhead. Present values were
computed by discounting future net revenues by 10% per year.

                                            January 31,
                              2003              2004                2005
                        ----------------   ---------------    ---------------
                          Oil       Gas     Oil      Gas        Oil      Gas
                        (Bbls)     (Mcf)   (Bbls)    (Mcf)    (Bbls)    (Mcf)


Proved reserves          3,761   597,773   73,790 4,394,959  30,398  2,181,471
Estimated future net cash
   flows from proved oil
   and  gas reserves       $2,147,220        $12,908,072        $13,685,443



                                       9
<PAGE>


Present value of future net
  cash flows from proved
  oil and gas reserves       $891,410         $3,898,061         $4,337,635

      In August 2003 the Company acquired 31 producing wells with a gathering
system, compressor stations, plus developed and undeveloped acreage. All of the
acquired properties are located in the Appalachian Basin of Eastern Kentucky. As
of January 31, 2005 the present value of the future cash flows attributable to
the properties in Kentucky was $2,998,444 ($1,839,977 in Proved Developed
Reserves and $1,158,467 in Proved Undeveloped Reserves).

      The Company's Proved Reserves include only those amounts which the Company
reasonably expects to recover in the future from known oil and gas reservoirs
under existing economic and operating conditions, at current prices and costs,
under existing regulatory practices and with existing technology. Accordingly,
any changes in prices, operating and development costs, regulations, technology
or other factors could significantly increase or decrease estimates of Proved
Reserves.

      In general, the volume of production from natural gas and oil properties
owned by the Company declines as reserves are depleted. Except to the extent the
Company acquires additional properties containing proved reserves or conducts
successful exploration and development activities, or both, the proved reserves
of the Company will decline as reserves are produced. Volumes generated from
future activities of the Company are therefore highly dependent upon the level
of success in acquiring or finding additional reserves and the costs incurred in
doing so.

GOVERNMENT REGULATION

      Various state and federal agencies regulate the production and sale of oil
and natural gas. All states in which the Company operated impose restrictions on
the drilling, production, transportation and sale of oil and natural gas.

      Under the Natural Gas Act of 1938, the Federal Energy Regulatory
Commission (the "FERC") regulates the interstate transportation and the sale in
interstate commerce for resale of natural gas. The FERC's jurisdiction over
interstate natural gas sales has been substantially modified by the Natural Gas
Policy Act under which the FERC continued to regulate the maximum selling prices
of certain categories of gas sold in "first sales" in interstate and intrastate
commerce.

      Effective January 1, 1993, however, the Natural Gas Wellhead Decontrol Act
(the "Decontrol Act") deregulated natural gas prices for all "first sales" of
natural gas. Because "first sales" include typical wellhead sales by producers,
all natural gas produced from the Company's natural gas properties is sold at
market prices, subject to the terms of any private contracts which may be in
effect. The FERC's jurisdiction over natural gas transportation is not affected
by the Decontrol Act.

      The Company's sales of natural gas will be affected by intrastate and
interstate gas transportation regulation. Beginning in 1985, the FERC adopted
regulatory changes that have significantly altered the transportation and


                                       10
<PAGE>

marketing of natural gas. These changes are intended by the FERC to foster
competition by, among other things, transforming the role of interstate pipeline
companies from wholesale marketers of natural gas to the primary role of gas
transporters. All natural gas marketing by the pipelines is required to divest
to a marketing affiliate, which operates separately from the transporter and in
direct competition with all other merchants. As a result of the various omnibus
rulemaking proceedings in the late 1980s and the individual pipeline
restructuring proceedings of the early to mid-1990s, the interstate pipelines
must provide open and nondiscriminatory transportation and
transportation-related services to all producers, natural gas marketing
companies, local distribution companies, industrial end users and other
customers seeking service. Through similar orders affecting intrastate pipelines
that provide similar interstate services, the FERC expanded the impact of open
access regulations to intrastate commerce.

      More recently, the FERC has pursued other policy initiatives that have
affected natural gas marketing. Most notable are (1) the large-scale divestiture
of interstate pipeline-owned gas gathering facilities to affiliated or
non-affiliated companies; (2) further development of rules governing the
relationship of the pipelines with their marketing affiliates; (3) the
publication of standards relating to the use of electronic bulletin boards and
electronic data exchange by the pipelines to make available transportation
information on a timely basis and to enable transactions to occur on a purely
electronic basis; (4) further review of the role of the secondary market for
released pipeline capacity and its relationship to open access service in the
primary market; and (5) development of policy and promulgation of orders
pertaining to its authorization of market-based rates (rather than traditional
cost-of-service based rates) for transportation or transportation-related
services upon the pipeline's demonstration of lack of market control in the
relevant service market. The Company does not know what effect the FERC's other
activities will have on the access to markets, the fostering of competition and
the cost of doing business.

      As a result of these changes, sellers and buyers of natural gas have
gained direct access to the particular pipeline services they need and are
better able to conduct business with a larger number of counter parties. The
Company believes these changes generally have improved the access to markets for
natural gas while, at the same time, substantially increasing competition in the
natural gas marketplace. The Company cannot predict what new or different
regulations the FERC and other regulatory agencies may adopt or what effect
subsequent regulations may have on production and marketing of natural gas from
the Company's properties.

      In the past, Congress has been very active in the area of natural gas
regulation. However, as discussed above, the more recent trend has been in favor
of deregulation and the promotion of competition in the natural gas industry.
Thus, in addition to "first sales" deregulation, Congress also repealed
incremental pricing requirements and natural gas use restraints previously
applicable. There are other legislative proposals pending in the Federal and
State legislatures which, if enacted, would significantly affect the petroleum
industry. At the present time, it is impossible to predict what proposals, if
any, might actually be enacted by Congress or the various state legislatures and
what effect, if any, these proposals might have on the production and marketing
of natural gas by the Company. Similarly, and despite the trend toward federal
deregulation of the natural gas industry, whether or to what extent that trend


                                       11
<PAGE>

will continue or what the ultimate effect will be on the production and
marketing of natural gas by the Company cannot be predicted.

      The Company's sales of oil and natural gas liquids are not regulated and
are at market prices. The price received from the sale of these products will be
affected by the cost of transporting the products to market. Much of that
transportation is through interstate common carrier pipelines. In 1995 the FERC
implemented regulations generally grandfathering all previously approved
interstate transportation rates and establishing an indexing system for those
rates by which adjustments are made annually based on the rate of inflation,
subject to certain conditions and limitations. These regulations may tend to
increase the cost of transporting oil and natural gas liquids by interstate
pipeline, although the annual adjustments may result in decreased rates in a
given year. These regulations have generally been approved on judicial review.
Every five years, the FERC will examine the relationship between the annual
change in the applicable index and the actual cost changes experienced by the
oil pipeline industry. The Company is not able to predict with certainty what
effect, if any, these relatively new federal regulations or the periodic review
of the index by the FERC will have on the Company.

      Federal, state, and local agencies have promulgated extensive rules and
regulations applicable to the Company's oil and natural gas exploration,
production and related operations. Most states require permits for drilling
operations, drilling bonds and the filing of reports concerning operations and
impose other requirements relating to the exploration of oil and natural gas.
Many states also have statutes or regulations addressing conservation matters
including provisions for the unitization or pooling of oil and natural gas
properties, the establishment of maximum rates of production from oil and
natural gas wells and the regulation of spacing, plugging and abandonment of
such wells. The statutes and regulations of some states limit the rate at which
oil and natural gas is produced from the Company's properties. The federal and
state regulatory burden on the oil and natural gas industry increases the
Company's cost of doing business and affects its profitability. Because these
rules and regulations are amended or reinterpreted frequently, the Company is
unable to predict the future cost or impact of complying with those laws.

COMPETITION AND MARKETING

      The Company is faced with strong competition from many other companies and
individuals engaged in the oil and gas business, many are very large, well
established energy companies with substantial capabilities and established
earnings records. The Company may be at a competitive disadvantage in acquiring
oil and gas prospects since it must compete with these individuals and
companies, many of which have greater financial resources and larger technical
staffs. It is nearly impossible to estimate the number of competitors; however,
it is known that there are a large number of companies and individuals in the
oil and gas business.

      Exploration for and production of oil and gas are affected by the
availability of pipe, casing and other tubular goods and certain other oil field
equipment including drilling rigs and tools. The Company depends upon
independent drilling contractors to furnish rigs, equipment and tools to drill
its wells. Higher prices for oil and gas may result in competition among
operators for drilling equipment, tubular goods and drilling crews which may


                                       12
<PAGE>

affect the Company's ability expeditiously to drill, complete, recomplete and
work-over its wells. However, the Company has not experienced and does not
anticipate difficulty in obtaining supplies, materials, drilling rigs, equipment
or tools.

      The Company does not refine or otherwise process crude oil and condensate
production. Substantially all of the crude oil and condensate production of the
Company's wells are sold at posted prices under short-term contracts, which is
customary in the industry.

      The market for oil and gas is dependent upon a number of factors beyond
the Company's control, which at times cannot be accurately predicted. These
factors include the proximity of wells to, and the capacity of, natural gas
pipelines, the extent of competitive domestic production and imports of oil and
gas, the availability of other sources of energy, fluctuations in seasonal
supply and demand, and governmental regulation. In addition, there is always the
possibility that new legislation may be enacted which would impose price
controls or additional excise taxes upon crude oil or natural gas, or both.
Oversupplies of natural gas can be expected to recur from time to time and may
result in the gas producing wells being shut-in. Increased imports of natural
gas, primarily from Canada, have occurred and are expected to continue. Such
imports may adversely affect the market for domestic natural gas.

      Since the early 1970's the market price for crude oil has been
significantly affected by policies adopted by the member nations of Organization
of Petroleum Exporting Countries ("OPEC"). Members of OPEC establish prices and
production quotas among themselves for petroleum products from time to time with
the intent of controlling the current global supply and consequently price
levels. The Company is unable to predict the effect, if any, that OPEC or other
countries will have on the amount of, or the prices received for, crude oil and
natural gas produced and sold from the Company's wells.

      Gas prices, which were once effectively determined by government
regulations, are now largely influenced by competition. Competitors in this
market include producers, gas pipelines and their affiliated marketing
companies, independent marketers, and providers of alternate energy supplies,
such as residual fuel oil. Changes in government regulations relating to the
production, transportation and marketing of natural gas have also resulted in
significant changes in the historical marketing patterns of the industry.
Generally, these changes have resulted in the abandonment by many pipelines of
long-term contracts for the purchase of natural gas, the development by gas
producers of their own marketing programs to take advantage of new regulations
requiring pipelines to transport gas for regulated fees, and an increasing
tendency to rely on short-term contracts priced at spot market prices.

GENERAL

      The Company has never been a party to any bankruptcy, receivership,
reorganization, readjustment or similar proceedings. Since the Company is
engaged in the oil and gas business, it does not allocate funds to product
research and development in the conventional sense. The Company does not have
any patents, trade-marks, or labor contracts. With the exception of the
Company's oil and gas leases, the Company does not have any licenses,
franchises, concessions or royalty agreements. Backlog is not material to an
understanding of the Company's business. The Company's business is not subject


                                       13
<PAGE>

to renegotiation of profits or termination of contracts or subcontracts at the
election of federal government.

      The Company's offices are located at 800 Northeast 63rd Street, Oklahoma
City, Oklahoma. The 4,800 square feet of office space is occupied under an
unwritten lease, on a month-to-month basis, requiring rental payments of $3,800
per month. The building is owned by George G. Shaw, the Company's Chief
Executive Officer and a Director.

         As of May 24, 2005, the Company employed 11 people. The Company's
employees work in management, engineering, geology, land and legal and
accounting. In addition, 5 contract workers were responsible for the supervision
and operation of the Company's field activities and providing well services.

ITEM 2.  DESCRIPTION OF PROPERTY
--------------------------------

        The Company's offices are located at 800 Northeast 63rd Street, Oklahoma
City, Oklahoma and consist of 4,800 square feet which is rented on a
month-to-month basis for $3,800 per month. The building is owned by George G.
Shaw, the Company's Chief Executive Officer and a Director.

ITEM 3.  LEGAL PROCEEDINGS.
--------------------------

     On March 16 2005 Double G Energy,  Inc. filed a lawsuit against the Company
and the Company's officers in the District Court for Dallas County Texas. In its
complaint Double G Energy alleges that:

     o    In 2004 it entered  into an  agreement  with the  Company to drill and
          complete wells on the Company's field in Pulaski County, Kentucky

     o    The Company failed to comply with its obligations under the agreement,
          and

     o    The  Company  and its  officers  made a number  of  misrepresentations
          concerning the drilling program.

      Double G's complaint asks for unspecified actual and punitive damages
against the Company.

      The Company has denied the allegations in Double G's complaint. In April
2005 the Company moved to dismiss the lawsuit filed by Double G Energy.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         Not Applicable


                                       14
<PAGE>


ITEM 5.  MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
        OTHER  SHAREHOLDER MATTERS.

      Prior to May 7, 2003 the Company's common stock was traded listed on the
Toronto Venture Exchange under the symbol EEG. On March 3, 2003 the Company's
common stock was listed on the OTC Bulletin Board under the symbol EGSR. The
following table sets forth the high and low sale prices of the Company's common
stock in U.S. currency during the periods presented as reported by the Toronto
Venture Exchange and the NASD. The closing sale prices reflect inter-dealer
prices without adjustment for retail markups, markdowns or commissions and may
not reflect actual transactions.
                                             Closing Sale Price
                                                 Common Stock
                                             ------------------
            Quarter Ended                    High           Low
            -------------                    ----           ---

            April 30, 2002                   $0.07          $0.04
            July 31, 2002                    $0.13          $0.03
            October 31, 2002                 $0.13          $0.03
            January 31, 2003                $ 0.11         $ 0.05

            April 30, 2003                   $0.21          $0.05
            July 31, 2003                    $0.46          $0.15
            October 31, 2003                 $0.30          $0.11
            January 31, 2004                 $0.26          $0.15

            April 30, 2004                   $0.52          $0.21
            July 31, 2004                    $0.60          $0.36
            October 31, 2004                 $0.80          $0.48
            January 31, 2005                 $0.77          $0.42

      As of June 30, 2005 there were approximately 900 holders of the Company's
common stock.

      The market price of the Company's common stock is subject to significant
fluctuations in response to, and may be adversely affected by (i) variations in
quarterly operating results, (ii) developments in the oil and gas industry
generally and more particularly within the geographically and geological areas
that the Company owns and operates properties, and (iii) general stock market
conditions.

      The Company's common stock is subject to the "penny stock" rules. The
penny stock trading rules impose additional duties and responsibilities upon
broker-dealers and salespersons recommending the purchase or sale of a penny
stock. Required compliance with these rules will materially limit or restrict
the ability to resell the Company's common stock, and the liquidity typically
associated with other publicly traded stocks may not exist.

    During the year ended January 31, 2005 neither the Company, any officer or
director of the Company, nor any principal shareholder purchased any shares of
the Company's common stock either from the Company, from third parties in a


                                       15
<PAGE>

private transaction, or as a result of purchases in the open market.

Potential Issuance of Additional Shares.

      As of June 30, 2005 the Company had 49,878,135 outstanding shares of
common stock.

      The following table lists additional shares of the Company's common stock
which, as of June 30, 2005, may be issued as the result of the exercise of
outstanding options, warrants or convertible notes:

                                                         Number of       Note
                                                           Shares     Reference
                                                         ---------    ---------

   Shares issuable upon exercise of warrants sold in
   private offering                                      4,295,000         A

   Shares issuable upon exercise of options granted pursuant
   to the Company's Incentive and Non-Qualified Stock
   Option Plans.                                           130,000         B

   Shares issuable upon the exercise of warrants issued to a
   private investor.                                       100,000         C

   Shares issuable upon conversion of promissory note      495,948         D

A. Between January 2004 and May 2004 the Company sold 5,000,000 shares of common
stock and 5,000,000 warrants to private investors for $1,500,000. Each warrant
entitles the holder to purchase one share of the Company's common stock at a
price of $0.50 per share. The warrants expire on the earlier of January 31, 2006
or three weeks following written notification by the Company that its common
stock closed at or above $0.85 per share for five consecutive trading days. As
of June 30, 2005 warrants to purchase 705,000 shares had been exercised.

B. Options are held by Dr. James Attarian, a former director of the Company, are
exercisable at a price of $0.32 per share and expire on July 15, 2005.

C. The warrants allow the holders to purchase 100,000 shares of the Company's
common stock at a price of $0.32 per share at any time prior to June 30, 2005.

D. In August 2003, the Company acquired oil and gas properties from three
private corporations for $3,000,000 in convertible notes. At the holder's option
the notes were convertible into shares of the Company's common stock equal in
number to the amount determined by dividing each $1.00 of note principal or
accrued interest to be converted by one. In order to induce the noteholders to
convert their notes into common stock, and thereby eliminate the debt owed to
the noteholders, the Company provided the noteholders with an option to convert
their notes at a conversion price of $0.50. In March 2004 the Company paid


                                       16
<PAGE>

$100,000, plus interest, on one of the notes and holders of notes with a
remaining principal amount of $2,400,000 converted their notes into 4,800,000
shares of the Company's common stock. The remaining note, in the principal
amount of $495,948 as of May 24, 2005, bears interest at 8.5% per year and is
due in August 2023. At any time prior to August 1, 2006 all or any part of the
unpaid principal or interest due on this note may be converted into shares of
the Company's common stock on the basis of one share of common stock for every
dollar of note principal or interest converted.

      The Company has filed a registration statement with the Securities and
Exchange Commission so that the shares issuable upon the exercise of the
warrants referred to in Note A as well as the shares referred to in Note D are
available for public sale.

    The shares issuable upon the exercise of the options referred to in Note B
are available for public sale by means of a separate registration statement on
Form S-8.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF  OPERATION

      The following discussion of financial condition and results of operations
should be read in conjunction with the consolidated financial statements and the
notes to the consolidated financial statements, which are included elsewhere in
this report.

RESULTS OF OPERATIONS

         The factors that most significantly affect the Company's results of
operations are (i) the sale prices of crude oil and natural gas, (ii) the amount
of production sales, (iii) the amount of lease operating expenses, and (iv) the
level of interest rates on, and amount of, borrowings. Sales of production and
level of borrowings are significantly impacted by the Company's ability to
maintain or increase its production from existing oil and gas properties through
its exploration and development activities. The following table reflects the
average prices received by the Company for oil and gas, the average production
cost per BOE, and the amount of oil and gas produced for the periods presented:

                                   Year Ended January 31,
                             ----------------------------------
Production Data:             2003           2004           2005
                             ----           ----           ----

Production -
    Oil (Bbls)                403           950           4,008
   Gas (Mcf)               30,683        41,411         106,276
Average sales price -
   Oil (Bbls)              $26.08        $28.62          $39.06
   Gas (Mcf)               $ 3.44         $4.86           $5.33
Average production
    costs per BOE          $ 4.79         $3.74           $2.49

      Prices received by the Company for sales of crude oil and natural gas have
fluctuated significantly from period to period. The fluctuations in oil prices


                                       17
<PAGE>

during these periods reflect market uncertainty regarding the inability of the
Organization of Petroleum Exporting Countries ("OPEC") to control the production
of its member countries, as well as concerns related to the global supply and
demand for crude oil. Gas prices received by the Company fluctuate with changes
in the spot market price for gas.

      Changes in natural gas and crude oil prices will significantly affect the
revenues and cash flow of the wells and the value of the oil and gas properties.
Declines in the prices of crude oil and natural gas could have a material
adverse effect on the success of the Company's operations and activities,
recovery of the costs of acquiring, developing and producing the its wells and
profitability. The Company is unable to predict whether the prices of crude oil
and natural gas will rise, stabilize or decline in the future.

      Other than the foregoing, the Company does not know of any trends, events
or uncertainties that have had or are reasonably expected to have a material
impact on the Company's net sales, revenues or expenses.

YEAR ENDED JANUARY 31, 2005

    Material changes of certain items in the Company's Statement of Operations
for the year ended January 31, 2005, as compared to the same period last year,
are discussed below:

                        Increase (I)
Item                   or Decrease (D) Reason
----                   --------------  ------

Oil and Gas Sales            I         Increase in the price of oil and gas.

Lease                                  Operating Expenses I Workover of 22 wells
                                       in Kentucky and increase in gas
                                       production.

Settlement Expense           I         Settlement of lawsuit with former
                                       director and his affiliates. See
                                       Note 5 to the financial statements
                                       included as part of this report.

Interest Expense              D        Reduction in interest-bearing liabilities

YEAR ENDED JANUARY 31, 2004

     Material changes of certain items in the Company's  Statement of Operations
for the year ended  January 31, 2004,  as compared to the same period last year,
are discussed below:

                         Increase (I)
Item                    or Decrease (D)  Reason
----                    ---------------  ------

Oil and Gas Sales             I          Increase in gas prices and August 2003
                                         acquisition of gas wells in Kentucky

Employee Stock Bonus          I          Shares of common stock issued for
                                         services rendered


                                       18
<PAGE>

                         Increase (I)
Item                    or Decrease (D)  Reason
----                    ---------------  ------

Legal and Accounting          I          Legal costs  associated  with oil and
                                         gas  drilling program, acquisition  of
                                         oil and gas properties in Kentucky and
                                         registration statement on Form S-8

Oil and gas production        I          August 2003 acquisition of gas wells in
                                         Kentucky

Consulting                    I          Use of three consultants  during period
                                         and expense associated with issuance of
                                         stock for past services

Office and General Expense    I          Lease expense for new office equipment

Travel and Promotion          I          Expenses relating to geological studies
                                         in Kansas, Wyoming, and the acquisition
                                         of the Kentucky properties.

Interest Expense              I          Interest expense (8.5% per year)
                                         related to $3,000,000 convertible
                                         note issued by Company to pay for oil
                                         and gas properties in Kentucky.

OIL AND GAS PRICE FLUCTUATIONS

      Fluctuations in crude oil and natural gas prices have significantly
affected the Company's operations and the value of its assets. As a result of
the instability and volatility of crude oil and natural gas prices and at times
the market conditions within the oil and gas industry, financial institutions
are selective in the energy lending area and have reduced the percentage of
existing reserves that may qualify for the borrowing base to support energy
loans.

      The Company's principal source of cash flow is the production and sale of
its crude oil and natural gas reserves which are depleting assets. Cash flow
from oil and gas production sales depends upon the quantity of production and
the price obtained for such production. An increase in prices permits the
Company to finance its operations to a greater extent with internally generated
funds, may allow the Company to obtain equity financing more easily or on better
terms, and lessens the difficulty of attracting financing from industry partners
and non-industry investors. However, price increases heighten the competition
for Leases and Prospects, increase the costs of exploration and development
activities, and, because of potential price declines, increase the risks
associated with the purchase of Producing Properties during times that prices
are at higher levels.


                                       19
<PAGE>

      A decline in oil and gas prices (i) reduces the cash flow internally
generated by the Company which in turn reduces the funds available for servicing
debt and exploring for and replacing oil and gas reserves, (ii) increases the
difficulty of obtaining equity and debt financing and worsens the terms on which
such financing may be obtained, (iii) reduces the number of Leases and Prospects
which have reasonable economic terms, (iv) may cause the Company to permit
Leases to expire based upon the value of potential oil and gas reserves in
relation to the costs of exploration, (v) results in marginally productive oil
and gas wells being abandoned as non-commercial, and (vi) increases the
difficulty of attracting financing from industry partners and non-industry
investors. However, price declines reduce the competition for Leases and
Prospects and correspondingly reduce the prices paid for Leases and Prospects.
Furthermore, exploration and production costs generally decline, although the
decline may not be at the same rate as that of oil and gas prices.

      The Company's results of operations are somewhat seasonal due to seasonal
fluctuations in the sales prices for natural gas. Although in recent years crude
oil prices have been generally higher in the third and fourth fiscal quarters,
these fluctuations are not believed to be seasonal. Natural gas prices have been
generally higher in the fourth fiscal quarter.

CAPITAL RESOURCES AND LIQUIDITY

    The Company's material sources and (uses) of cash during the year ended
January 31, 2005 were:

      Cash used in operations                               $   (359,002)
      Repayment of loans from related parties                 (1,131,010)
      Sale of common stock                                     3,204,014
      Repayment of notes                                        (222,119)
      Loan to employee                                           (17,086)
      Sale of oil and gas properties                             318,812
      Purchase of equipment and oil and gas properties        (1,682,892)

    The Company's material sources and (uses) of cash during the year ended
January 31, 2004 were:

      Cash used in operations                                $  (447,805)
      Repayment of loans from shareholder and unrelated
        third party                                             (112,550)
      Sale of common stock                                     1,002,878)
      Purchase of equipment and oil and gas properties          (386,597)

      As a result of the Company's continued losses and lack of cash there is
substantial doubt as to the Company's ability to continue operations. The
Company plans to generate profits by drilling productive oil or gas wells.
However, the Company will need to raise the funds required to drill new wells
from third parties willing to pay the Company's share of drilling and completing
the wells. The Company may also attempt to raise needed capital through the
private sale of its securities or by borrowing from third parties. The Company
may not be successful in raising the capital needed to drill oil or gas wells.


                                       20
<PAGE>

In addition, any future wells which may be drilled by the Company may not be
productive of oil or gas. The inability of the Company to generate profits may
force the Company to curtail or cease operations.

      In August 2003 the Company acquired 31 producing gas wells, a pipeline,
compressor stations and approximately 23,000 leased and 8,500 optioned acres
from three private corporations for $3,000,000 in convertible notes. In March
2004 the Company paid $100,000, plus interest, on one of the notes and holders
of notes with a remaining principal amount of $2,400,000 converted their notes
into 4,800,000 shares of the Company's common stock. The remaining note, in the
principal amount of $485,647 as of January 31, 2005, bears interest at 8.5% per
year and is due in August 2023. At any time prior to August 1, 2006 all or any
art of the unpaid principal or interest due on this note may be converted into
shares of the Company's common stock on the basis of one share of common stock
for every dollar of note principal or interest converted.

      Between January and May 2004 the Company sold 5,000,000 shares of common
stock and 5,000,000 warrants to private investors for $1,500,000. Each warrant
entitles the holder to purchase one share of the Company's common stock at a
price of $0.50 per share. The warrants expire on the earlier of January 31, 2006
or three weeks following written notification by the Company that its common
stock closed at or above $0.85 per share for five consecutive trading days. As
of June 30, 2005 warrants to purchase 705,000 shares had been exercised.

      A group of shareholders used 1,150,000 of their shares to support raising
the funds required to settle the litigation between the Company and James
Attarian. The 1,150,000 shares had a value of $586,500 which was recorded as
consulting expenses; $153,000 for the three month period ended April 30,2003;
$51,000 for the three month period ended July 31, 2003; $255,000 for the three
month period ended April 30, 2004; and $127,500 for the three month period ended
July 31, 2004. The 1,150,000 shares were returned to the shareholders in
November, 2004. The financial statements for the three and nine months ended
October 31, 2004 reflect the effect of this series of transactions in the proper
accounting periods. The Company intends to amend its Form 10 KSB for the fiscal
year ended January 31, 2004 and its Form 10QSB for the quarters ended April 30,
2004 and July 31, 2004 to properly reflect the cost of these transactions in the
proper accounting periods.

      George Shaw, the Company's president, was owed $305,350 by the Company as
of January 31, 2005. Mr. Shaw advised the Company that he will not seek the
repayment of his loans prior to December 31, 2005. In May 2005, Mr. Shaw agreed
to convert the $305,350 into 1,221,400 shares of the Company's restricted common
stock.

      At the request of its auditors, the Company ordered a new and more
complete engineering reservoir study of its Kentucky oil and gas properties.
Based upon the revised reservoir study, previously calculated depletion changed
for the periods subsequent to the purchase of the field. The Company intends to
file an amended 10-KSB for the year ended January 31, 2004 and an amended 10QSB
for the first and second quarter of fiscal 2005 to reflect changes and
corrections for these periods.


                                       21
<PAGE>

Contractual Obligations

      Except as shown in the following table, as of January 31, 2005, the
Company did not have any material capital commitments, other than funding its
operating losses and repaying outstanding debt. It is anticipated that any
capital commitments that may occur will be financed principally through
borrowings from institutional and private lenders (although such additional
financing has not been arranged) and the sale of shares of the Company's common
stock or other equity securities. However, there can be no assurance that
additional capital resources and financings will be available to the Company on
a timely basis, or if available, on acceptable terms.

      Future payments due on the Company's contractual obligations as of January
31, 2005 are as follows:

                    Total      2006      2007-2008    2009-2010    Thereafter

Notes payable     $485,647   $11,220     $25,320       $29,993      $392,114
Operating leases  $ 31,662   $24,000     $ 6,784       $   878      $      0
                 ---------  --------    --------      --------     ---------

Total             $517,309   $35,220     $32,104       $30,871      $392,114
                 =========  ========    ========      ========     =========


ITEM 7.  FINANCIAL STATEMENTS
-----------------------------

      See the financial statements attached to this report.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
------------------------------------------------------

      Effective April 8, 2004 Spicer Jeffries LLP resigned as the Company's
independent accountants as a result of the decision by Spicer Jeffries to
discontinue its auditing practice for publicly traded corporations. Spicer
Jeffries audited the Company's financial statements for the fiscal years ended
January 31, 2003, 2002 and 2001. The reports of Spicer Jeffries for these fiscal
years did not contain an adverse opinion, or disclaimer of opinion and were not
qualified or modified as to audit scope or accounting principles. However, the
reports of Spicer Jeffries for these fiscal years was qualified with respect to
uncertainty as to the Company's ability to continue as a going concern. During
the Company's two most recent fiscal years and subsequent interim period ended
April 8, 2004 there were no disagreements with Spicer Jeffries on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedures, which disagreements, if not resolved to the satisfaction of
Spicer Jeffries would have caused it to make reference to such disagreements in
its reports.

      On April 14, 2004 the Company retained Russell & Atkins, PLC to act as the
Company's independent certified public accountants. The change in the Company's
auditors was recommended and approved by the board of directors of the Company.

      Prior to April 14, 2004 the Company did not consult with Russell & Atkins
regarding the application of accounting principles to a specified transaction,
either completed or proposed, or the type of audit opinion that might be


                                       22
<PAGE>

rendered on the Company's financial statements, or any matter that was the
subject of a disagreement or a reportable event as defined in the regulations of
the Securities and Exchange Commission.

      Effective November 15, 2004 Russell & Atkins, PLC resigned as the
Company's independent accountants as a result of the decision by Russell &
Atkins to discontinue its auditing practice for publicly traded corporations.
Russell & Atkins audited the Company's financial statements for the fiscal year
ended January 31, 2004. The report of Russell & Atkins for this fiscal year did
not contain an adverse opinion, or disclaimer of opinion and was not qualified
or modified as to audit scope or accounting principles. However, the report of
Russell & Atkins for this fiscal year was qualified with respect to uncertainty
as to the Company's ability to continue as a going concern. During the Company's
two most recent fiscal years and subsequent interim period ended November 15,
2004 there were no disagreements with Russell & Atkins on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedures, which disagreements, if not resolved to the satisfaction of
Russell & Atkins would have caused it to make reference to such disagreements in
its reports.

      On December 10, 2004 the Company retained Murrell, Hall, McIntosh & Co.,
PLLP to act as the Company's independent certified public accountants.

      The change in the Company's auditors was recommended and approved by the
board of directors of the Company.

      Prior to December 10, 2004 the Company did not consult with Murrell, Hall,
McIntosh & Co. regarding the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Company's financial statements, or any matter that was
the subject of a disagreement or a reportable event as defined in the
regulations of the Securities and Exchange Commission.

ITEM 8A.  CONTROLS AND PROCEDURES

     George Shaw, the Company's Chief Executive and Principal Financial Officer,
has  evaluated  the  effectiveness  of the  Company's  disclosure  controls  and
procedures  as of the  end of the  period  covered  by this  report;  and in his
opinion the Company's disclosure controls and procedures are effective to ensure
that material  information  relating to the Company,  including its consolidated
subsidiaries, is made known to him by others within those entities, particularly
during the period in which this report is being prepared,  so as to allow timely
decisions  regarding  required  disclosure.  There  have been no  changes in the
Company's  internal  controls over financial  reporting that occurred during the
quarter that have materially  affected,  or are reasonably  likely to materially
affect, the Company's internal control over financial reporting. As a result, no
corrective actions with regard to significant  deficiencies or material weakness
in the Company's internal controls were required.



                                       23
<PAGE>


ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
--------------------------------------------------------------------

      The following table sets forth information with respect to each of the
Company's executive officers and directors. The Company's directors are
generally elected at the annual shareholders' meeting and hold office until the
next annual shareholders' meeting or until their successors are elected and
qualified. The Company's executive officers are elected by our board of
directors and serve at its discretion.

Name               Age    Position
----               ---    --------

George G. Shaw      74    President, Principal Financial Officer,  Principal
                          Accounting Officer and a Director
G. Scott Shaw       34    Vice President, Secretary and a Director

      The following is a brief description of the business background of the
Company's executive officers and directors:

     GEORGE G. SHAW is the President,  Principal  Financial  Officer,  Principal
Accounting  Officer and a director of the Company.  Mr. Shaw has been an officer
and  director  of the Company  since July 1991.  Mr.  Shaw is the  President  of
Energas  Corporation  and  its  subsidiary  Energas  Pipeline  Co.,  Inc.,  both
privately held companies  engaged in oil and gas  exploration and gas gathering.
Mr. Shaw is the father of G. Scott Shaw.

      G. SCOTT SHAW is the Vice President and a director of the Company and has
held these positions since August 1996. Mr. Shaw became the Company's Secretary
in April 2003. Mr. Shaw graduated from Oklahoma State University in 1993 with a
Bachelor of Science degree in Biology. Mr. Shaw is the son of George G. Shaw.

      The Company does not have a compensation committee. The Company's Board of
Directors serves as the Company's Audit Committee. Prior to his resignation as
an officer and director of the Company in June 2005, David W. Young was the
Company's financial expert. Since Mr. Young was an officer and director of the
Company, Mr. Young was not independent as that term is defined Section 121(A) of
the Listing Standards of the American Stock Exchange. Mr. Young is a certified
public accountant and since 1981 Mr. Young has had his own public accounting
firm.

      The Company has adopted a Code of Ethics which is applicable to the
Company's principal executive, financial, and accounting officers and persons
performing similar functions. The Code of Ethics is available on the Company's
website located at www.energasresources.com

ITEM 10.  EXECUTIVE COMPENSATION

      The following table sets forth the compensation during the three years
ended January 31, 2005, paid or accrued, to George G. Shaw, the Company's Chief
Executive Officer during those years. None of the Company's executive officers


                                       24
<PAGE>

received compensation in excess of $100,000 during the three years ended January
31, 2005.
                                                                   Long-Term
                                                                 Compensation
                                                                     Awards
                                                                  Common Stock
                                Year Ended   Annual Compensation   Underlying
Name and Principal Position     January 31,  Salary (2) Bonus (3)     Options
---------------------------     -----------  ---------- --------- -------------

George G. Shaw                     2005      $36,000
President and Chief
 Executive Officer                 2004      $34,000
                                   2003      $33,000         --           --

     (1)  The named executive officer received additional non-cash compensation,
          perquisites and other personal benefits; however, the aggregate amount
          and value  thereof did not exceed 10% of the total  annual  salary and
          bonus paid to and accrued for the named  executive  officer during the
          year.
     (2)  Dollar value of base salary (both cash and non-cash) earned during the
          year.
     (3)  Dollar value of bonus (both cash and non-cash) earned during the year.

    The following shows the amounts which the Company expects to pay to its
officers during the twelve month period ending January 31, 2006, and the time
which the Company's executive officers plan to devote to the Company's business.
The Company does not have employment agreements with any of its officers.

                                Proposed                Time to Be Devoted
Name                          Compensation            To Company's Business
----                          ------------            ---------------------

George G. Shaw                   $60,000                      100%
G. Scott Shaw                    $48,000                      100%

      The Company does not have any employment agreements with its officers or
employees. The Company does not maintain any keyman insurance on the life or in
the event of disability of any of its officers.

STOCK OPTION AND BONUS PLANS

      Incentive Stock Option Plan. The Company's Incentive Stock Option Plan
authorizes the issuance of up to 2,000,000 shares of the Company's common stock
to persons that exercise options granted pursuant to the Plan. Only Company
employees may be granted options pursuant to the Incentive Stock Option Plan.
The option exercise price is determined by the Company's Board of Directors but
cannot be less than the market price of the Company's common stock on the date
the option is granted.

      Non-Qualified Stock Option Plan. The Company's Non-Qualified Stock Option
Plan authorizes the issuance of up to 1,000,000 shares of the Company's common
stock to persons that exercise options granted pursuant to the Plans. The
Company's employees, directors, officers, consultants and advisors are eligible


                                       25
<PAGE>

to be granted options pursuant to the Plans, provided however that bona fide
services must be rendered by such consultants or advisors and such services must
not be in connection with the offer or sale of securities in a capital-raising
transaction. The option exercise price is determined by the Company's Board of
Directors.

      Stock Bonus Plan. The Company's Stock Bonus Plan allows for the issuance
of up to 4,000,000 shares of common stock. Such shares may consist, in whole or
in part, of authorized but unissued shares, or treasury shares. Under the Stock
Bonus Plan, the Company's employees, directors, officers, consultants and
advisors are eligible to receive a grant of the Company's shares, provided
however that bona fide services must be rendered by consultants or advisors and
such services must not be in connection with the offer or sale of securities in
a capital-raising transaction.

      The following table shows the weighted average exercise price of the
outstanding options granted pursuant to the Company's Incentive and
Non-Qualified Stock Option Plans as of January 31, 2005. The Company's Incentive
and Non-Qualified Stock Option Plans were not approved by the Company's
shareholders.

                                                            Number of Securities
                                                            Remaining Available
                            Number                         For Future Issuance
                         of Securities                         Under Equity
                         to be Issued    Weighted-Average  Compensation Plans
                         Upon Exercise   Exercise Price of (Excluding Securities
                         of Outstanding   of Outstanding        Reflected in
Plan Category             Options  [a]       Options             Column (a))
--------------------------------------------------------------------------------

Incentive Stock                 --                --              2,000,000
   Option Plan
Non-Qualified Stock
 Option Plan               100,000             $0.32                750,000

      The following table shows certain information as of June 30, 2005
concerning the stock options and stock bonuses granted by the Company pursuant
to the Plans. Each option represents the right to purchase one share of the
Company's common stock.


                                  Total       Shares                 Remaining
                                  Shares    Reserved for   Shares    Options/
                                 Reserved   Outstanding   Issued As    Shares
Name of Plan                    Under Plans   Options    Stock Bonus Under Plans
------------                    ----------- ------------ ----------- -----------

Incentive Stock Option Plan      2,000,000          --          --    2,000,000
Non-Qualified Stock Option Plan  1,000,000     250,000          --      750,000
Stock Bonus Plan                 4,000,000          --   1,520,000    2,480,000

     The  following  table  summarizes  the  options and stock  bonuses  granted
pursuant to the Plans as of June 30, 2005:


                                       26
<PAGE>

Incentive Stock Options

                                                                   Options
Shares Subject           Exercise   Date of     Expiration      Exercised as of
 To Option                 Price     Grant    Date of Option    June 30, 2005
------------------       --------   -------   --------------    ---------------

                                     None.

Non-Qualified Stock Options

                                                                     Options
Shares Subject           Exercise   Date of     Expiration      Exercised as of
 To Option                 Price     Grant    Date of Option    June 30, 2005
------------------       --------   -------   --------------    ---------------

   250,000                 $0.32    6/30/03       7/15/05            250,000

Stock Bonuses

    Name          Shares Issued as Stock Bonus           Date Issued
  --------        ----------------------------           -----------

Taylor Dillard              350,000                       10/30/03
Hiram Kelly                 350,000                       10/30/03
Sherman Formhals            100,000                       10/30/03
David Young                 100,000                       10/30/03
Jerry Parry                 100,000                       10/30/03
Jerry Parry                 250,000                       02/09/04
George Shaw                 100,000                       10/30/03
Scott Shaw                  100,000                       10/30/03
Vicki Webb                   30,000                       10/30/03
Patricia Harris              20,000                       10/30/03
Ronnie Webb                  20,000                       10/30/03
                        -----------
                          1,520,000


Other Warrants and Convertible Securities
-----------------------------------------

      See Item 5 of this report for information concerning other outstanding
options and warrants.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
-------------------------------------------------------------------------

     The following table shows the beneficial  ownership of the Company's common
stock  as of June  30,  2005 by (i)  each  person  who is  known to us to be the
beneficial  owner of more than 5%,  (ii)  each of our  directors  and  executive
officers,  and (iii) all of our executive officers and directors as a group. All
persons  listed  have sole  voting and  investment  power with  respect to their
shares unless otherwise  indicated,  and there are no family relationships among


                                       27
<PAGE>

the Company's  executive  officers and directors,  except that George G. Shaw is
the father of G. Scott Shaw.

                                             Shares           Percent of
                                          Beneficially      Outstanding
Name and address                             Owned              Shares
----------------                          ------------      ------------

George G. Shaw                            6,776,956            13.6%
Third Floor, 800 Northeast 63rd Street
Oklahoma City, Oklahoma 73105

G. Scott Shaw                               718,385             1.4%
800 Northeast 63rd Street
Oklahoma City, Oklahoma 73105

                                             Shares           Percent of
                                          Beneficially      Outstanding
Name and address                             Owned              Shares
----------------                          ------------      ------------

Terry Tyson                               8,980,300              18%
16250 County Rd. U
Lipscomb, TX  79056-6304

Clare LLC                                        --               --
401 South LaSalle, Suite 302
Chicago, Illinois 60605

Executive Officers and Directors
  as a group (two persons)                7,495,341              15%

(1)  Includes (i) 2,024,916 shares held by Energas Corporation of which
     1,759,680 of these shares are subject to a time-release escrow agreement,
     and (ii) 3,460,320 shares held by Energas Pipeline Co., Inc. are subject to
     a time-based escrow agreement and (iii) 1,585,000 shares of common stock
     held by Mr. Shaw. The shares held under the escrow agreements will be
     released from escrow in 12 six month installments commencing on March 21,
     2002 (initially four installments of 290,000 shares of common stock
     followed by eight installments of 580,000 shares of common stock). Mr. Shaw
     controls Energas Corporation and Energas Pipeline Co., Inc.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
--------------------------------------------------------

      The Company's offices are located at 800 Northeast 63rd Street, Oklahoma
City, Oklahoma. The office space is occupied under an unwritten month-to-month
lease requiring rental payments of $3,800 per month to George Shaw, the owner of
the building. During the years ended January 31, 2004, 2003 and 2002 the Company
paid rent of $45,600, $61,803 and $40,797, respectively. In addition, Mr. Shaw
owns Energas Pipeline Company that operates the natural gas gathering system to
which the Company's four wells in Atoka County, Oklahoma are connected. During


                                       28
<PAGE>

the years ended January 31, 2005, 2004 and 2003, Energas Pipeline Company
received $14,322.04, $16,592, and $14,428, respectively, for its services in
operating the gathering system.

      As of January 31, 2005 the Company had borrowed approximately $305,350
from George Shaw. These loans are non-interest bearing, unsecured, and do not
have fixed terms of repayment. The amounts borrowed from Mr. Shaw and his
affiliates were used to fund the Company's operations. In May 2005 Mr. Shaw
agreed to convert the $305,350 owed to him into 1,221,400 restricted shares of
the Company's common stock.

      The Company believes that the rent paid to Mr. Shaw and the terms of the
other transactions between the Company and its officers and directors discussed
above were fair and reasonable and were upon terms as least as favorable as the
Company could have obtained from unrelated third parties.

      Transactions with the Company's officers, directors, and principal
shareholders may continue and may result in conflicts of interest between the
Company and these individuals. Although these persons have fiduciary duties to
the Company and its shareholders, there can be no assurance that conflicts of
interest will always be resolved in favor of Company and its shareholders.
Neither the Company's Articles of Incorporation nor Bylaws contain any
provisions for resolving potential or actual conflicts of interest.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

Exhibit
  No.     Description of Exhibit                                  Page Number
-------   ----------------------                                  -----------

3.1       Certificate of Incorporation                                 *

3.2       Bylaws                                                       *

3.3       Certificate of Domestication in Delaware                     *

4.1       Form of Certificate of Common Stock                          *

4.6       Escrow Amendment Agreement among Registrant,  Pacific
          Corporate Trust Company, Energas Corporation and Energas
          Pipeline Company                                             *

4.7       Escrow Agreement, dated September 20, 1991, among
          Registrant,  Pacific Corporate Trust Company, Energas
          Corporation and Energas Pipeline Company                     *

4.8       Registration Rights Agreement, dated July 18, 2001 between
          Registrant and Clare, LLC                                    *


                                       29
<PAGE>

Exhibit
  No.     Description of Exhibit                                  Page Number
-------   ----------------------                                  -----------

4.9       Escrow Amendment Agreement, dated April 13, 1994, among
          Registrant, Pacific Corporate Trust Company, Energas
          Corporation and Energas Pipeline Company                     *

10.7      Gas Purchase Agreement, dated March 1, 1991 between
          Registrant and Energas Pipeline Company.                     *

10.8      Gas Purchase Agreement, dated March 1, 1991 between
          Registrant and Energas Pipeline Company.                     *

10.9      Gas Gathering Agreement, dated July 1, 1992 between Energas
          Pipeline Company, Inc. and A.T. Gas Gathering Systems, Inc.  *

10.10     Gas Purchase Agreement, dated February 13, 1997, between
          Panenergy Field Services, Inc. and Energas Pipeline Company. *

10.11     Gas Purchase Agreement, dated October 1, 1999, between
          Registrant and Ozark Gas Gathering, L.L.C.                   *

16.       Letter regarding change in certifying public accountant.     **

21.       Registrant's Subsidiaries                                    *

23.       Consent of Accountants                                    _____

31.       Rule 13a-14(a)/15d-14(a) certifications                   _____

32.       Section 1350 certifications                               _____

*  Incorporated by referenced to the same exhibit filed with the Company's
   initial registration statement on Form 10-SB.

** Incorporated by reference to the same exhibit filed with the Company's report
   on Form 8-K dated April 8, 2004.

     During the three  months  ended  January  31,  2005 the  Company  filed the
following report on Form 8-K:

            Date                    Item Report
          --------                 -------------

          12/15/04              Change of auditors


                                       30
<PAGE>

ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES

     Russell  &  Atkins,   PLC  served  as  the  Company's   independent  public
accountants  during the fiscal year ended January 31, 2004. The following  table
shows the aggregate fees billed to the Company during the year ended January 31,
2004 by Russell & Atkins, PLC.

                                                 2004
                                                -----

Audit Fees                                     22,750
Audit-Related Fees                                 --
Financial Information Systems                      --
Design and Implementation Fees                     --
Tax Fees                                           --
All Other Fees                                     --

    Audit fees represent amounts billed for professional services rendered for
the audit of the Company's annual financial statements and the reviews of the
financial statements included in the Company's Forms 10-Q for the fiscal year.
Before Russell & Atkins, PLC was engaged by the Company to render audit
services, the engagement was approved by the Company's Board of Directors.

     Murrell,  Hall,  McIntosh & Co., PLLP served as the  Company's  independent
public  accountants during the fiscal year ended January 31, 2005. The following
table  shows the  aggregate  fees  billed to the  Company  during the year ended
January 31, 2003 by Murrell, Hall, McIntosh & Co., PLLP.


                                                                   2005

Audit Fees                                                          7,767
Audit-Related Fees                                                     --
Financial Information Systems                                          --
Design and Implementation Fees                                         --
Tax Fees                                                               --
All Others Fees                                                        --

     Audit fees represent amounts billed for professional  services rendered for
the audit of the Company's  annual  financial  statements and the reviews of the
financial  statements  included in the Company's Forms 10-Q for the fiscal year.
Before Murrell,  Hall, McIntosh & Co., PLLP was engaged by the Company to render
audit services, the engagement was approved by the Company's Board of Directors.



                                       31
<PAGE>

                              RUSSELL & ATKINS, PLC

                                                     5809 North Grand, Suite D
Dennis Atkins                                        Oklahoma City, OK  73118
Casey Russell                                        Telephone:  (405) 607-8743
Member SEC                                           Fax:  (405) 607-8744
Practice Section                                     E-mail: ARCPAS@hotmail.com




To the Board of Directors
Energas Resources, Inc.

We have audited the consolidated statements of operations, stockholders'
(deficit) and cash flows of Energas Resources, Inc. for the year ended January
31, 2004. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis of our opinion.

In our opinion, these consolidated financial statements present fairly, in all
material respects, the results of operations and cash flows of Energas
Resources, Inc. for the year ended January 31, 2004 in accordance with
accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in the Notes to the
financial statements, the Company has not generated sufficient cash flows from
operations and has suffered operating losses since inception. These conditions
raise substantial doubt about its ability to continue as a going concern.
Management's plans in this regard are also discussed in the Notes. The financial
statements do not include any adjustments that might result from the outcusome
of this uncertainty.


/s/ Russell & Atkins, PLC

Oklahoma City, Oklahoma
May 17, 2004



<PAGE>

             Report of Independent Registered Public Accounting Firm



To the Board of Directors
Energas Resources, Inc.

We have audited the accompanying consolidated balance sheet of Energas
Resources, Inc. and its subsidiaries as of January 31, 2005, and the related
consolidated statements of operations, changes in stockholders' equity, and cash
flows for the year then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements, assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Energas Resource,
Inc. and its subsidiaries as of January 31, 2005, and the consolidated results
of its operations and its consolidated cash flows for the year then ended in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered recurring losses from operations
and had a working capital deficit of $(218,533) at January 31, 2005, which raise
substantial doubt about its ability to continue as a going concern. Management's
plans regarding those matters also are described in Note 2. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.

/s/Murrell, Hall, McIntosh & Co., PLLP

May 24, 2005
Oklahoma City, Oklahoma


                                       1
<PAGE>



                          ENERGAS RESOURCES, INC.
                         CONSOLIDATED BALANCE SHEET
                              JANUARY 31, 2005

                         ASSETS

Current Assets
 Cash                                                          $   188,026
  ccounts receivable - oil and gas
 A                                                                 177,702
 Accounts receivable - related parties                              35,510
  il and gas properties held for resale
 O                                                                  97,438
                                                        ---------------------
 Total Current Assets
                                                                   498,676

Property and Equipment
 Oil and gas properties, net of accumulated depletion
 and depreciation                                                4,016,767
 Kentucky gathering system, net of accumulated
 depreciation                                                      531,257
  ther, net of accumulated depreciation
 O                                                                  15,205
                                                        ---------------------

                                                                 4,563,229


Other Assets                                                        17,086
                                                        ---------------------

Total Assets                                                  $  5,078,991
                                                        =====================

     LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities
 Accounts payable and accrued expenses                       $   384,355
 Due to shareholders and related parties                         309,642
 Notes payable                                                    11,992
 Current portion of long-term debt                                11,220
                                                        ---------------------
 Total Current Liabilities                                       717,209

Long-term Debt less current portion                              474,427
Asset Retirement Obligation                                       86,799

Stockholders' Equity (Deficit)
 Common stock, $.001 par value 100,000,000 shares
  authorized 49,660,635 and 33,163,001 shares issued
  and outstanding at January 31, 2005                             49,661
 Additional paid in capital                                   14,965,173
 Retained earnings (deficit)                                 (11,214,278)
                                                        ---------------------
Total Stockholders' Equity (Deficit)                           3,800,556
                                                        ---------------------
Total Liabilities and Stockholders' Equity (Deficit)        $  5,078,991
                                                        =====================


     See  accompanying  summary of  accounting  policies  and notes to financial
statements.



                                      F-1


<PAGE>



                            ENERGAS RESOURCES, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS


                                                      Year ending
                                                       January 31
                                         ---------------------------------------
                                                2005               2004
                                         ---------------------------------------

Revenue
 Oil and gas sales                        $     653,475      $     296,657
 Pipeline Revenue                                15,015             15,365
                                         ---------------------------------------
  Total Revenue                                  668,490            312,022

Operating Expenses
 Lease operating expense                         324,150            157,991
 General and administrative expense            1,142,971          1,113,066
 Depreciation, depletion and amortization        283,941            309,338
                                         ---------------------------------------
  Total Operating Expenses                     1,751,062          1,580,395
                                         ---------------------------------------

Operating Income (Loss)                       (1,082,572)        (1,268,373)

Other (Expenses) Income
 Other Income                                     16,675                 --
 Settlement expense                              (31,264)                --
 Interest expense                                (67,014)          (181,540)
                                         ---------------------------------------
  Total Other (Expense) Income                   (81,603)          (181,540)

                                         ---------------------------------------
Net (Loss)                                 $  (1,164,175)     $  (1,449,913)
                                         =======================================

Net (Loss) per Share, Basic and Diluted    $       (0.03)     $       (0.05)
                                         =======================================

Weighted average of number of shares
outstanding                                  41,251,753         28,667,028
                                         =======================================


                                      F-2



     See  accompanying  summary of  accounting  policies  and notes to financial
statements.


<PAGE>


                             ENERGAS RESOURCES, INC.
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
                  FOR THE YEARS ENDED JANUARY 31, 2005 AND 2004

<TABLE>
       <S>                            <C>               <C>           <C>          <C>            <C>

                                           Common Stock            Additional                    Total
                                 --------------------------------   Paid-In     Accumulated   Stockholders'
                                     Shares           Amount        Capital      Deficit     Equity (Deficit)
                                     ------           ------        -------      --------    ---------------

Balance, January 31, 2003          26,143,001        $ 26,143     $7,621,777    $(8,600,190)   $ (952,270)

Stock issued for consulting
services                              500,000             500         49,500              -        50,000
Private placement of stock          1,000,000           1,000         49,000              -        50,000
Private placement of stock          2,000,000           2,000        298,000              -       300,000
Settlement of debt for stock        1,000,000           1,000         99,000              -       100,000
Stock bonus                           700,000             700        153,300                      154,000
Employee stock plan                   570,000             570        124,830                      125,400
Exercise of stock warrants          1,250,000           1,250        248,750                      250,000
Net Loss                                    -               -              -     (1,449,913)   (1,449,913)
                                 ------------      ----------   ------------   ------------   -----------

Balance, January 31, 2004          33,163,001          33,163      8,644,157    (10,050,103)   (1,372,783)

Net loss                                    -               -              -     (1,164,175)   (1,164,175)
Private placement of stock          5,000,000           5,000      1,495,000              -     1,500,000
Conversion of notes payable to
stock                               4,800,000           4,800      2,395,200                    2,400,000
Stock issued in settlement of
litigation                            350,000             350         69,650                       70,000
Options issued in settlement of
litigation                                                            31,500                       31,500
Stock issued for equity line of
credit                                959,786             960        562,154                      563,114
Stock issued for consulting
services                            1,150,000           1,150        585,350                      586,500
Warrants exercised for common
stock                               3,975,000           3,975      1,136,925                    1,140,900
Stock bonus                           250,000             250         37,250                       37,500
Employee stock plan                    12,848              13          7,987                        8,000
                                 ------------      ----------   ------------   ------------   -----------

Balance, January 31, 2005          49,660,635      $   49,661   $ 14,965,173   $(11,214,278)  $ 3,800,556
                                 ============      ==========   ============   ============   ===========

</TABLE>

                                      F-3

See accompanying summary of accounting policies and notes to financial
statements.


<PAGE>

                             ENERGAS RESOURCES, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                             Year ending
                                                             January 31
                                                    ----------------------------
                                                         2005           2004
                                                    ----------------------------
Cash Flows From Operating Activities
 Net (Loss)                                         $ (1,164,175)  $ (1,449,913)
 Adjustments to reconcile net loss to net cash
  provided by
  operating activities
 Depreciation, depletion and amortization                283,941        309,338
 Issuance of stock for consulting fees                   586,500         50,000
 Issuance of stock for employee bonuses                   45,500        279,400
 Issuance of stock and options for settlement            101,500        100,000
 Interest capitalized                                         --        107,766
 (Increase) Decrease in accounts receivable              (60,882)      (151,630)
 Increase (Decrease) in accounts payable and
  accrued expense                                       (215,908)       286,457

  Increase (Decrease) in Notes payable                    (1,500)            --
  Increase (Decrease) in Asset retirement obligation      66,022         20,777
                                                    -------------  -------------
        Net Cash Flows From Operating Activities        (359,002)      (447,805)

Cash Flows from Financing Activities
 (Repayments of) Advances from related party and
  stockholders                                      $ (1,131,010)      (112,550)
 Sale of common stock                                  3,204,014      1,002,878
 Payments on Notes Payable                              (222,119)            --
                                                    -------------  -------------
 Net Cash Provided (Used) by Financing Activities      1,850,885        890,328

Cash Flows From Investing Activities
 Loan made to employee                                   (17,086)            --
 Proceeds from sale of oil and gas properties            318,812             --
 Purchase of property and equipment                   (1,682,892)      (386,597)
                                                    -------------  -------------
 Net Cash Provided (Used) by Investing Activities     (1,381,166)      (386,597)
                                                    -------------  -------------

Increase (Decrease) in Cash                              110,717         55,926
Cash at Beginning of Year                                 77,309         21,383
                                                    -------------  -------------
Cash at End of Year                                 $    188,026   $     77,309
                                                    =============  =============

Supplemental Information:
 Interest Paid in Cash                              $          -   $          -
 Non-Cash Transactions:
  Long-term debt converted into 4,800,000 shares of
  common stock                                         2,400,000   $          -
 Advances from stockholders settled for 350,000
  shares of common stock                                  70,000
 250,000 options for common stock                         31,500
 Consulting fees and stock bonuses:
  1,400,000 shares of common stock                       624,000
  1,270,000 shares of common stock                       279,400
 Asset Retirement Obligation                              66,022


                                      F-4

     See accompanying summary of accounting policies and notes to financial
statements.



<PAGE>

                             ENERGAS RESOURCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      YEARS ENDED JANUARY 31, 2005 AND 2004

1.  NATURE OF OPERATIONS

Energas Resources, Inc. was originally incorporated in 1989 in British Columbia,
Canada as a public company listed on the Canadian Venture Exchange. In 2001, the
Company registered as a Delaware corporation becoming a United States domestic
corporation. In 2002, its registration statement filed with the Securities and
Exchange Commission became effective and its stock is traded in the Over the
Counter (OTC) market.

The Company is primarily engaged in the operation, development, production,
exploration and acquisition of petroleum and natural gas properties in the
United States through its wholly-owned subsidiaries, A.T. Gas Gathering Systems,
Inc. ("AT GAS"), and TGC, Inc. ("TGC"). In addition, the Company owns and
operates natural gas gathering systems, located in Oklahoma and Kentucky, which
serves wells operated by the Company for delivery to a mainline transmission
system. The majority of the Company's operations is maintained and occurs
through AT GAS and TGC. AT GAS is a company incorporated in the State of
Oklahoma, U.S.A. and TGC is a company incorporated in the state of Kentucky,
U.S.A.

On August 1, 2003, the Company entered into agreements to acquire producing oil
and gas properties located in Kentucky from three private corporations in
exchange for $3,000,000 in convertible notes. The notes are convertible at a
rate of one share of common stock for each $1.00 of principal converted. The
properties consist of 31 producing wells with a gathering system, compressor
stations, plus developed and undeveloped acreage.

2.  GOING CONCERN

The Company is in the process of acquiring and developing petroleum and natural
gas properties with adequate production and reserves to operate profitability.
As of January 31, 2005, it had a working capital deficiency of $(218,533) and
incurred an operating loss of $(1,164,175) for the year then ended. The
Company's ability to continue as a going concern is dependent upon obtaining
financing and achieving profitable levels of operations. The Company is
currently seeking additional funds and additional resource property interests
through private placements of equity and debt instruments. There can be no
assurance that its efforts will be successful.

The consolidated financial statements do not give effect to any adjustments
which would be necessary should the Company be unable to continue as a going
concern and therefore be required to realize its assets and discharge its
liabilities in the normal course of business at amounts different from those
reflected in these consolidated financial statements.

                                      F-5

<PAGE>


3.  SIGNIFICANT ACCOUNTING POLICIES

Basis of consolidation - The consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries, AT Gas and TGC. All
significant inter-company items have been eliminated in consolidation.

Use of estimates in the preparation of financial statements - The preparation of
financial statements in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Revenue recognition - Oil and natural gas revenue is recognized at the time
title is transferred to the customer. Pipeline revenue is earned as a gathering
fee at the time the gas is delivered to the customer.

Petroleum and natural gas properties - The Company employs the full cost method
of accounting for petroleum and natural gas properties whereby all costs
relating to exploration and development of reserves are capitalized. Such costs
include land acquisition costs, geological and geophysical costs, costs of
drilling both productive and non-productive wells, and related overhead.

Capitalized costs, excluding costs relating to unproven properties, are depleted
using the unit-of-production method based on estimated proven reserves, as
prepared by an independent engineer. For the purposes of the depletion
calculation, proven reserves are converted to a common unit of measure on the
basis of their approximate relative energy content. Investments in unproved
properties are not amortized until the proved reserves associated with the
projects can be determined or until impairment occurs. If an assessment of such
properties indicates that properties are impaired, the amount of impairment is
added to the capitalized cost base to be amortized.

Under the full cost method, the net book value of natural gas and oil
properties, less related deferred income taxes, may not exceed a calculated
"ceiling". The ceiling is the estimated after-tax future net revenue from proved
natural gas and oil properties, discounted at 10% per annum plus the lower of
cost or fair market value of unproved properties. In calculating future net
revenues, prices and costs in effect at the time of the calculation are held
constant indefinitely, except for changes that are fixed and determinable by
existing contracts. The net book value is compared to the ceiling on a quarterly
basis. The excess, if any, of the net book value above the ceiling is required
to be written off as an expense.

Proceeds on disposal of properties are normally applied as a reduction of the
capitalized costs without recognition of a gain or loss, unless such amounts
would significantly alter the relationship between capitalized costs and proved
reserves of oil and gas, in which case gain or loss would be recognized.
Abandonment of properties are accounted for as adjustments of capitalized costs
with no loss recognized, unless such adjustment would significantly alter the

                                      F-6

<PAGE>

relationship between capitalized costs and proved reserves of oil and gas
attributable to a cost center.

Long-lived assets - The Company reviews its long-lived assets for impairment
whenever changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. For purposes of evaluating the recoverability of
long-lived assets, the recoverability test is performed using estimated
undiscounted net cash flows to be generated by the asset.

Equipment - Equipment is recorded at cost and depreciated on the Straight-line
basis over the following periods:

                  Computer equipment         5-7 years
                  Truck                        7 years
                  Office equipment           5-7 years
                  Computer software            5 years
                  Gathering system            30 years


Asset Retirement Obligations - In accordance with the provisions of SFAS 143
"Accounting for Asset Retirement Obligations" the Company records the fair value
of its liability for asset retirement obligations in the period in which it is
incurred and a corresponding increase in the carrying amount of the related long
live assets. Over time, the liability is accreted to its present value at the
end of each reporting period, and the capitalized cost is depreciated over the
useful life of the related assets. Upon settlement of the liability, the Company
will either settle the obligation for its recorded amount or incur a gain or
loss upon settlement. The Company's asset retirement obligations relate to the
plugging and abandonment of its natural gas properties.

Accounts Receivable - Management periodically assesses the collectibility of the
Company's accounts receivable. Accounts determined to be uncollectible are
charged to operations when that determination is made.

Earnings per share - The Company follows SFAS No. 128; Earnings per Share, for
computing and presenting earnings per share, which requires, among other things,
dual presentation of basic and diluted earnings per share on the face of the
statement of operations. Basic EPS is computed by dividing income available to
common shareholders by the weighted average number of common shares outstanding
for the period. Diluted EPS reflects the potential dilution that could occur if
securities, options or warrants were exercised or converted into common shares
or resulted in the issuance of common shares that then share in the earnings of
the entity. For the years ended January 31, 2005 and 2004, no options or
warrants were considered common stock equivalents as their effect would be
anti-dilutive.

Stock-based compensation - In October 1995, the FASB issued SFAS No. 123,
"Accounting for Stock-Based Compensation." SFAS No. 123 encourages, but does not
require, companies to record compensation expense for stock-based employee
compensation plans at fair value. The Company has elected to account for its
stock-based compensation plans using the intrinsic value method prescribed by
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to

                                      F-7

<PAGE>

Employees" (APB No. 25). Under the provisions of APB No. 25, compensation cost
for stock options is measured as the excess, if any, of the quoted market price
of the Company's common stock at the date of grant over the amount an employee
must pay to acquire the stock. The Company has not yet adopted the provisions of
SFAS No. 123 Revised "Share-Based Payment."

Concentration -The Company sells all of its oil production and a portion of its
gas production through a related company, Energas Pipeline Company, who sells
the oil production to Conoco and gas production to Scissortail Energy. The
Company believes that either or both of these customers can be replaced on a
timely basis. The Company sells its Kentucky production to North American Energy
Corp., an independent natural gas marketing company.

Cash and cash equivalents - For purposes of the statement of cash flows, the
Company considers all highly liquid debt instruments purchased with a maturity
of three months or less to be cash equivalents.

Income taxes - Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for future timing
differences between the financial statement carrying amounts and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered.

Reclassifications - Certain prior period amounts have been reclassified to
conform to current period presentation.

New Accounting Pronouncements - In April 2002, the Financial Accounting
Standards Board ("FASB") issued SFAS No. 145, "Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections."
Such standard requires any gain or loss on extinguishments of debt to be
presented as a component of continuing operations (unless specific criteria are
met) whereas SFAS No. 4 required that such gains and losses be classified as an
extraordinary item in determining net income. The adoption of SFAS 145 did not
have a material effect on the Company's financial position or results of
operations.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities." Such standard requires costs associated with
exit or disposal activities (including restructurings) to be recognized when the
costs are incurred, rather than at a date of commitment to an exit or disposal
plan. SFAS No. 146 nullifies EITF Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)." Under SFAS No. 146, a
liability related to an exit or disposal activity is not recognized until such
liability has actually been incurred; whereas under EITF Issue No. 94-3, a
liability was recognized at the time of a commitment to an exit or disposal
plan. The provisions of this standard are effective for exit or disposal
activities initiated after December 31, 2002. The adoption of SFAS 146 did not
have a material effect on the Company's financial position or results of
operations.

                                      F-8

<PAGE>

On December 31, 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation--Transition and Disclosure." This standard amends SFAS No. 123,
"Accounting for Stock-Based Compensation," to provide alternative methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based employee compensation. This standard also requires prominent
disclosures in both annual and interim financial statements about the method of
accounting for stock-based employee compensation and the effect of the method
used on reported results. The adoption of SFAS 148 did not have a material
effect on the Company's financial position or results of operations.

In April 2003, the FASB issued SFAS No. 149 "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities". This statement amends and
clarifies financial accounting and reporting for derivative instruments embedded
in other contracts (collectively referred to as derivatives) and for hedging
activities under SFAS 133, "Accounting for derivative instruments and hedging
activities". The adoption of SFAS 149 did not have a material effect on the
Company's financial position or results of operations.

In May 2003, the FASB issued SFAS No. 150 "Accounting for certain financial
instruments with characteristics of both liabilities and equity". This statement
establishes standards how an issuer classifies and measures certain financial
instruments with characteristics of both liabilities and equity. The adoption of
SFAS 150 did not have a material effect on the Company's financial position or
results of operations.

In November 2004, the FASB issued SFAS No. 151, Inventory Costs - an amendment
of ARB No. 43, Chapter 4. Statement No. 151 requires that certain abnormal costs
associated with the manufacturing, freight, and handling costs associated with
inventory be charged to current operations in the period in which they are
incurred. The financial statements are unaffected by implementation of this new
standard.

In December 2004, the FASB issued a revision of SFAS No. 123, Share-Based
Payment. The statement establishes standards for the accounting for transactions
in which an entity exchanges its equity investments for goods and services. It
also addresses transactions in which an entity incurs liabilities in exchange
for goods or services that are based on the fair value of the entity's equity
instruments or that may be settled by the issuance of those equity instruments.
The statement does not change the accounting guidance for share-based payments
with parties other than employees. The statement is effective for the quarter
beginning January 1, 2006. The Company does not expect this statement to have an
effect on its reporting.

In December 2004, the FASB issued SFAS No. 153, Exchanges of Non-monetary
Assets-amendment of APB Opinion No. 29. Statement 153 eliminates the exception
to fair value for exchanges of similar productive assets and replaces it with a
general exception for exchanged transactions that do not have a commercial
substance, defined as transactions that are not expected to result in
significant changes in the cash flows of the reporting entity. This statement is
effective for exchanges of non-monetary assets occurring after June 15, 2005.
The Company does not expect this statement to have an effect on its reporting.

                                      F-9

<PAGE>


4.  ACQUISITIONS AND RELATED DEBT

In August 2003 the Company acquired 31 producing wells with a gathering system,
compressor stations, plus developed and undeveloped acreage. All of the acquired
properties are located in the Appalachian Basin of eastern Kentucky. The
properties were acquired from three private corporations for $3,000,000 in
convertible notes. The notes bear interest at 8.5% per year and are due in
August 2023. All or any part of the unpaid principal or interest may be
converted into shares of the Company's common stock on the basis of one share of
common stock for every dollar of note principal or interest converted. As an
inducement to convert, the terms of the agreements were subsequently modified to
allow for conversion of unpaid principal and accrued interest into the Company's
common stock on the basis of one share of common stock for every $.50 of note
principal or interest converted. In March, 2004, two of the three note holders
exercised their option to convert under these new terms resulting in $2,400,000
of principal converted into 4,800,000 shares of the Company's common stock.

5.  SETTLEMENT OF LITIGATION

On April 2, 2004, the Company settled two lawsuits with a shareholder and his
related companies for a total of $500,000 in cash, 350,000 shares of the
Company's common stock and 250,000 options with an exercise price of $.32 with
an expiration date of June 15, 2005. This settlement paid in full a note in the
amount of $280,000, advances from a shareholder in the amount of $261,975 and
accrued interest payable in the amount of $87,901, resulting in a loss of
$31,624 on this settlement as detailed below:

               Consideration given:
               Cash                         $ 500,000
               Oil Lease                       60,000
               Stock                           70,000
               Options                         31,500
                                        -------------
                    Total consideration       661,500
               Liabilities retired:
               Notes Payable                  280,000
               Due Shareholder                261,975
               Accrued Interest                87,901
                                        -------------
                                              629,876

               Settlement Expense             $31,624
                                              =======


6.  EMPLOYEE LOAN

As of January 31, 2005, the Company has a non-interest bearing loan to an
employee totaling $17,086. Beginning February 1, 2005, the employee will repay
the loan through payroll deductions.


                                      F-10

<PAGE>



7.  PROPERTY AND EQUIPMENT

The following is a summary of property and equipment, at cost, less accumulated
depreciation, depletion and amortization as of January 31:

Capitalized Costs Relating to Oil and
 Gas Producing Activities at January 31,        2005         2004
                                           --------------------------

Oil and gas properties                     $ 4,500,724   $3,747,626
Unproved oil and gas properties                173,018      234,093
                                           --------------------------
  Total oil and gas property and             4,673,742    3,981,719
equipment
Kentucky Gathering System                      531,257
Other property and equipment                    65,108       46,496
                                           --------------------------
Less accumulated depreciation,
depletion, Amortization and impairment        (706,878)    (445,360)
                                           --------------------------

Total Property and Equipment               $ 4,563,229   $3,582,855
                                           ==========================

Oil and gas properties are accounted for using the full cost method. Depletion
was $278,342 and $303,522 for the years ended January 31, 2005 and 2004,
respectively.

8.  SALE OF OIL AND GAS PROPERTIES

During the fiscal year ended January 31, 2005, the Company sold an 80% working
interest for bore hole assignments only in 20 wells (no acreages) in the Pulaski
County field in Kentucky for $100,000. In 2003 the Company sold a 12% Working
Interest in 5,945.86 acres and 2 producing oil wells in the Rusty Creek prospect
in Niobrara County, Wyoming for $168,000. During February through May 2004, the
Company sold 83.25% Working Interest in 1,350 acres in Harper County, Kansas for
$37,440. The proceeds from these sales were treated as a reduction in the
carrying amount of oil and gas properties in accordance with the requirements of
the full cost method of accounting for oil and gas properties.

9.  EQUITY LINE OF CREDIT

On September 20, 2004, the Company entered into an equity line of credit
agreement with Dutchess Private Equities Fund II, L.P. The purpose of the equity
line of credit is to provide a possible source of funding for the Company's oil
and gas exploration activities or for working capital.

Under the equity line of credit agreement, Dutchess Private Equities has agreed
to provide the Company with up to $10,000,000 of funding prior to October 14,
2007. During this period, the Company may request a drawdown under the equity
line of credit by selling shares of its common stock to Dutchess Private
Equities, and Dutchess Private Equities will be obligated to purchase the
shares. The minimum and maximum amounts the Company can draw down at any one

                                      F-11

<PAGE>

time are determined using a formula contained in the equity line of credit
agreement. The Company is under no obligation to request any drawdown under the
equity line of credit. As of January 31, 2005, the company has drawn a sum of
$490,784, which was repaid by the issuance of 959,786 shares of the Company's
common stock.

10.  RELATED PARTY

At January 31, 2005, a receivable of $35,510.29 was due to the Company by
Energas Corporation, a private operating company owned by George Shaw, president
of the Company. The total marketing fee for the year ended January 31, 2005 was
approximately $3,000.00.

The Company sells gas from its Atoka County properties to Energas Corporation.
During the year ended January 31, 2005, these sales were approximately $145,000.
Energas Corporation deducts a marketing fee of $0.10 per MCF from the price paid
by the end purchaser.

The Company's  offices are located at 800 Northeast 63rd Street,  Oklahoma City,
Oklahoma  and consist of 4,800  square feet which is rented on a  month-to-month
basis for  $3,800  per  month.  The  building  is owned by George G.  Shaw,  the
Company's Chief Executive Officer and a Director.

11. INCOME TAXES

The Company has approximately $7,647,000 of net operating losses expiring
through 2025 that may be used to offset future taxable income but are subject to
various limitations imposed by rules and regulations of the Internal Revenue
Service. The net operating losses are limited each year to offset future taxable
income, if any, due to the change of ownership in the Company's outstanding
shares of common stock. In addition, at January 31, 2005, the Company had an
unused Canadian net operating loss carry-forward of approximately $395,000 USD,
expiring through 2008. These net operating loss carry-forwards may result in
future income tax benefits of approximately $3,059,000; however, because
realization is uncertain at this time, a valuation reserve in the same amount
has been established. Deferred income taxes reflect the net tax effects of
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.

Significant components of the Company's deferred tax liabilities and assets as
of January 31, 2005 and 2004 are as follows:

                                                2005           2004
                                                ----           ----

Deferred tax liabilities
  Timing difference in full cost pool        $(187,000)      $ (4,000)
                                             ==========      =========
Deferred tax assets
  Net operating losses                       3,059,000      2,673,000

Valuation allowance for deferred tax assets (2,872,000)    (2,669,000)
                                            -----------    -----------
                                            $       --     $       --
                                            ===========    ===========

The valuation allowance increased $203,000 and $379,000 for the period ending
January 31, 2005 and 2004, respectively.

                                      F-12

<PAGE>


The ability of the Company to utilize NOL carryforwards to reduce future federal
taxable income and federal income tax of the Company is subject to various
limitations under the Internal Revenue Code of 1986, as amended. The utilization
of such carryforwards may be limited upon the occurrence of certain ownership
changes, including the issuance or exercise of rights to acquire stock, the
purchase or sale of stock by 5% stockholders, as defined in the Treasury
regulations, and the offering of stock by the Company during any three-year
period resulting in an aggregate change of more than 50% in the beneficial
ownership of the Company.

12.  NOTES PAYABLE

The Company has the following notes payable as of January 31,

                                                             2005         2004
                                                             ----         ----
Note payable to private corporation, secured by oil
and gas properties, interest at 8.5%, convertible to
common stock at a rate of one share for each dollar
owed, due in 240 monthly installments including
principal and interest in the amount of $12,972 beginning
September 1, 2003                                          $    --   $1,553,883

Note payable to private corporation, secured by oil
and gas properties, interest at 8.5%, convertible to
common stock at a rate of one share for each dollar
owed, due in 240 monthly installments including
principal and interest in the amount of $8,678 beginning
September 1, 2003                                               --    1,035,922

Note payable to private corporation, secured by oil
and gas properties, interest at 8.5%, convertible to
common stock at a rate of one share for each dollar
owed, due in 240 monthly installments including
principal and interest in the amount of $4,339
beginning September 1, 2003                                485,647      517,961
                                                     -------------  ------------
                                                           485,647    3,107,766
          Less: Current Portion                            (11,220)    (157,391)
                                                     -------------  ------------
                                                     $     474,427  $ 2,950,375
                                                     =============  ============

                                      F-13

<PAGE>


Maturities of long-term debt for the next five years ending January 31, are as
follows:

                  2006             $   11,220
                  2007                 12,124
                  2008                 13,196
                  2009                 14,362
                  2010                 15,631
                  Thereafter          419,114
                                   ----------
                                   $  485,647
                                   ==========

13. EARNINGS PER SHARE

SFAS 128 requires a reconciliation of the numerator and denominator of the basic
and diluted earnings per share (EPS) computations. The following securities were
not included in the calculation of diluted earnings per share because their
effect was anti-dilutive:

The following reconciles the components of the EPS computation:

                                                        2005            2004
                                                        ----            ----
Basic (loss) per share computation Numerator:
  Net loss                                        $ (1,164,175)    $ (1,449,913)

Denominator:
  Weighted average common shares outstanding        41,251,753       28,667,028
Basic (loss) per share                            $      (0.03)    $      (0.05)

Diluted (loss) per share Numerator:
  Net loss                                        $ (1,164,175)    $ (1,449,913)

Denominator:
  Weighted average common shares outstanding        41,251,753       28,667,028
Diluted (loss) per share                          $      (0.03)    $      (0.05)


14. ASSET RETIREMENT OBLIGAITON

As described in Note 1, effective June 1, 2003, the Company adopted SFAS 143,
Accounting for Asset Retirement Obligations. Upon adoption of SFAS 143, the
Company recorded an asset retirement obligation liability of $20,770 and an
increase to net properties and equipment of $20,770.

                                      F-14

<PAGE>

The following table provides a roll forward of the asset retirement obligations
for the fiscal year ended January 31, 2005:

                                             Year Ended            Year Ended
                                          January 31, 2005     January 31, 2004
                                         -----------------     ----------------
  Asset retirement obligation beginning
        balance                             $     20,770         $       --
    Liabilities incurred                          60,000                 --
    Liabilities settled                               --                 --
    Accretion expense                              6,029             20,770
                                            ------------         ----------
  Asset retirement obligation ending balance$     86,799         $   20,770
                                            ============         ==========

15.  STOCK OFFERING

Beginning January 12, 2004, the Company offered for sale, in a private offering,
500 units at a price of $3,000 per unit. Each unit consists of 10,000 shares of
the Company's common stock and 10,000 warrants to purchase shares of the
Company's common stock at $.50 per share. The Company completed the offering in
May 2004, resulting in total proceeds to the Company of $1,500,000.

16.   OPTIONS AND WARRANTS

The Company has issued stock options and stock warrants as follows:

                      Outstanding   Granted   Exercised  Outstanding
            Exercise  January 31,     or         or       January 31, Expiration
             Price       2004     (Cancelled)  Expired       2005         Date
            --------  ----------- ----------- ---------  -----------  ----------

Options:    $  0.32      250,000   (120,000)    130,000                 06/15/05

Warrants    $  0.32      100,000         --     100,000                 06/30/05
           $0.20/0.30  2,000,000         --  (2,000,000)         --   9/30/04-05
          $  0.50             --  5,000,000  (1,105,000)  3,895,000

*   Expired unexercised

17.  OPERATING LEASES

The Company currently has three leases that are under contract. The Company
leases a compressor for the Kentucky gathering system at $1,975 per month
through December 2005 and then becomes month to month thereafter. In addition,
the Company has two office equipment leases through April 2010. All leases are
warranted with full maintenance.

                                      F-15

<PAGE>


Additionally, the minimum annual rental commitments as of January 31, 2005 under
noncancellable leases as follows: 2006 - $24,000; 2007 - $3,392; 2008 - $3,392;
2009 - $878; and 2010 - $0.

18.   MAJOR PURCHASERS

The Company's natural gas and oil production is sold under contracts with
various purchasers. Natural gas sales to one purchaser approximated 56% of total
natural gas and oil revenues for the fiscal year ended January 31, 2005.

See Note 10 regarding sales to Related Parties.

19.  FINANCIAL INSTRUMENTS

The carrying amount of cash, receivables, deposits, accounts payable, and
accrued expenses approximates fair value due to the short maturity of those
instruments. The carrying amounts for convertible debentures and notes payable
approximate fair value because the interest rates have remained generally
unchanged since the issuance of the convertible debentures and due to the
variable nature of the interest rates of the notes payable.

20.  CONTINGENCIES

In March, 2005, Double G, Inc filed a lawsuit in the state of Texas against the
Company and its subsidiaries, AT Gas and TGC, seeking payment of unspecified
amounts regarding claims of damages caused regarding the sale of an 80% Working
Interest for Bore Hole assignments as described in Note 6. The Company has
denied all claims and has filed as of April, 2005, to have the suit dismissed,
and has demanded and filed for arbitration as per the agreement that exists
between the Company's subsidiaries, AT Gas Gathering and TGC, Inc., officers of
the Company and Double G. Subsequent to the Company's motion to dismiss, Double
G has filed a lawsuit of the same nature in the state of Kentucky in May 2005.
The Company has vigorously denied all claims, and has held that Double G takes
their claims to arbitration as per the agreement. The Company was unable to
estimate the amount, if any, of the Company's ultimate liability to settle this
litigation. No accrual has been recorded at January 31, 2005 related to the
settlement of this litigation.

21.  SUBSEQUENT EVENTS

In May, 2005, the Company acquired approximately 3,000 acres and 18 wells in
Laurel County, KY which are currently being reworked and tested to see what the
field is capable of producing. The company is also continuing to lease acreage
in the area, but has yet to produce anything for profit as of June 15, 2005.

                                      F-16

<PAGE>


22.  SFAS 69 SUPPLEMENTAL DISCLOSURES (UNAUDITED)

Net Capitalized Costs

The Company's aggregate capitalized costs related to natural gas and oil
producing activities are summarized as follows:

                                            January 31,           January 31,
                                               2005                 2004
                                          ------------------------------------
Natural gas and oil properties and
related lease equipment:
     Proved                               $  4,500,724         $  3,673,141
     Unproved                                  173,018              234,093
                                         -------------        -------------
                                             4,673,742            3,907,234
Accumulated depreciation and depletion        (656,975)           (376,305)
                                         -------------        -------------
     Net capitalized costs                 $ 4,106,767          $ 3,530,929
                                         =============        =============

Unproved properties not subject to amortization consisted mainly of leasehold
acquired through acquisitions. The Company will continue to evaluate its
unproved properties; however, the timing of the ultimate evaluation and
disposition of the properties has not been determined.

Costs Incurred

Costs incurred in natural gas and oil property acquisition, exploration and
development activities that have been capitalized are summarized as follows:

                                                     Years Ended May 31,
                                                   ---------------------
                                                   2005             2004
                                                   ----             ----

Acquisition of properties proved and unproved   $       --      $3,000,000
Development costs                                  931,350         920,000
                                                ----------      ----------
                                                $  931,350      $3,920,000
                                                ==========      ==========

Results of Operations for Natural Gas and Oil Producing Activities

The Company's results of operations from natural gas and oil producing
activities are presented below for the fiscal years ended January 31, 2005 and
2004. The following table includes revenues and expenses associated directly
with the Company's natural gas and oil producing activities. It does not include
any interest costs and general and administrative costs and, therefore, is not
necessarily indicative of the contribution to consolidated net operating results
of the Company's natural gas and oil operations.

                                      F-17


<PAGE>


                                                  Years Ended January 31,
                                                   2005           2004
                                                   ----           ----

        Production revenues                   $  653,475     $   296,657
        Production costs                        (324,150)       (157,991)
        Depletion expense                       (278,342)       (303,522)
                                              ----------      ----------
                                                  50,983        (164,856)
        Imputed income tax provision (1)         (20,393)             --
                                             ----------- ---------------
        Results of operation for natural gas/oil
            producing activity               $    30,590       $(164,856)
                                             ===========       =========

(1)  The imputed income tax provision is hypothetical (at the statutory rate)
     and determined without regard to the Company's deduction for general and
     administrative expenses, interest costs and other income tax credits and
     deductions, nor whether the hypothetical tax provision will be payable.

Natural Gas and Oil Reserve Quantities

The following schedule contains estimates of proved natural gas and oil reserves
attributable to the Company. Proved reserves are estimated quantities of natural
gas and oil that geological and engineering data demonstrate with reasonable
certainty to be recoverable in future years from known reservoirs under existing
economic and operating conditions. Proved developed reserves are those which are
expected to be recovered through existing wells with existing equipment and
operating methods. Reserves are stated in thousand cubic feet (mcf) of natural
gas and barrels (bbl) of oil. Geological and engineering estimates of proved
natural gas and oil reserves at one point in time are highly interpretive,
inherently imprecise and subject to ongoing revisions that may be substantial in
amount. Although every reasonable effort is made to ensure that the reserve
estimates are accurate, due to their nature reserve estimates are generally less
precise than other estimates presented in connection with financial statement
disclosures.

                                           Gas - mcf        Oil - bbls
                                        ----------------  ----------------
Proved reserves:
  Balance, January 31, 2003                     597,773             3,761
   Purchase of reserves-in-place              3,940,802            65,265
   Improved recovery                                  -             5,714
   Extensions and discoveries                         -                 -
   Revisions of previous estimates                    -                 -
   Production                                  (143,616)             (950)
                                        ----------------  ----------------
  Balance, January 31, 2004                   4,394,959            73,790
                                        ----------------  ----------------
   Purchase of reserves-in-place
   Extensions and discoveries
   Revisions of previous estimates           (2,107,212)          (39,384)
   Production                                  (106,276)           (4,008)
                                        ----------------  ----------------
  Balance, January 31, 2005                   2,181,471            30,398
                                        ================  ================
Proved developed reserves:
  Balance, January 31, 2004                   2,241,709             3,761
  Balance, January 31, 2005                   1,678,133            30,398


                                      F-18

<PAGE>


Standardized Measure of Discounted Future Net Cash Flows:

The following schedule presents the standardized measure of estimated discounted
future net cash flows from the Company's proved reserves for the fiscal years
ended January 31, 2005 and 2004. Estimated future cash flows are based on
independent reserve data. Because the standardized measure of future net cash
flows was prepared using the prevailing economic conditions existing at January
31, 2005 and 2004, it should be emphasized that such conditions continually
change. Accordingly, such information should not serve as a basis in making any
judgment on the potential value of the Company's recoverable reserves or in
estimating future results of operations.

                                             Years Ended January 31,
                                              2005           2004
                                              ----           ----

Future production revenues (1)            $13,685,443    $21,092,100
Future production costs                    (3,783,015)    (6,847,028)
Future development costs                     (524,597)    (1,337,000)
                                        -------------  -------------
Future cash flows before income taxes       9,377,831     12,908,072
Future income tax                          (2,213,632)    (3,844,494)
                                         ------------   ------------
Future net cash flows                       7,164,199      9,063,578
Effect of discounting future annual
    cash flows at 10%                      (2,826,564)    (5,165,517)
                                         ------------   ------------
Standardized measure of discounted
    net cash flows                       $  4,337,635   $  3,898,061
                                         ============   ============

(1)  The weighted average natural gas and oil wellhead prices used in computing
     the Company's reserves were $5.95 per mcf and $35.25 per bbl at January 31,
     2005 as compared to $4.80 per mcf and $27.00 per bbl at January 31, 2004.

The following schedule contains a comparison of the standardized measure of
discounted future net cash flows to the net carrying value of proved natural gas
and oil properties at January 31, 2005 and 2004:

                                              Years Ended January 31,
                                              2005             2004
                                              ----             ----
Standardized measure of discounted future
     net cash flows                       $ 4,377,635    $ 3,898,061
Proved natural gas & oil property net of
     accumulated depletion                  3,843,749      3,296,836
                                         ------------   ------------
Standardized measure of discounted future
 net cash flows in excess of net carrying
 value of proved natural gas & oil
 properties                               $   533,886    $   601,225
                                         ============   ============

<PAGE>


                                   SIGNATURES

      In accordance with Section 13 or 15(a) of the Exchange Act, the Registrant
has caused this Report to be signed on its behalf by the undersigned, thereunto
duly authorized on the 7th day of April 2006.

                             ENERGAS RESOURCES, INC.


                                  By:  /s/ George G. Shaw
                                       ----------------------------------------
                                       George G. Shaw, President, Principal
                                       Accounting Officer and Principal
                                       Financial Officer


     In  accordance  with the Exchange  Act,  this Report has been signed by the
following persons on behalf of the Registrant in the capacities and on the dates
indicated.

                                     Title                    Date

/s/ George G. Shaw
-------------------
George G. Shaw                      Director             April 7, 2006



/s/ G. Scott Shaw
-------------------
G. Scott Shaw                       Director             April 7, 2006







<PAGE>







                             ENERGAS RESOURCES, INC.

                                   FORM 10-KSB/A

                                    EXHIBITS